Morningstar has downgraded the Treasury New Asia fund to investment grade from recommended on the back of waning confidence in the leadership team's competitive advantage.
Morningstar analyst Tim Wong said the core team had worked together extensively, but their research fell short of that offered by some rivals.
"The core group's stability is a welcome feature, but demonstrating greater analytical depth is critical for New Asia to attain our wholehearted endorsement," Wong said in a report yesterday.
The investment team of four migrated from Credit Suisse Asset Management.
The group is led by Treasury Asia Asset Management (TAAM) chief investment officer and founder Peter Sartori, who established TAAM in 2005 after heading the Asian equities team at Credit Suisse, and Singapore-based TAAM investment manager Eng-Teck Tan.
Investment manager Kenneth Wan and senior investment analyst Kathy Ng round out the team.
Sixty per cent of TAAM is owned by management and the remainder is owned by Australian-listed Treasury Group.
Wong said the ownership structure aligned managers' interests with those of investors, but added: "Material outflows in 2009/10 diminished the value of these ownership stakes, however."
He said the generalist team spent much time meeting with company executives and attending broker conferences before making investment decisions on companies.
"Despite all this, we're yet to be fully convinced about the analytical robustness of the junior staffers' proposed investments. Most importantly, Sartori and Tan's scrutiny of these ideas is not, in our view, quite at the same level as this category's leading lights," he said.
The fund's total return was -15.14 per cent over one year, -2.38 per cent over three years and -0.1 per cent over five years, underperforming the MSCI Asia ex-Japan Index in all cases.
As of 31 May, TAAM managed $820 million, including $508 million in the Asia strategy, Wong said in the report.
