Merian Global Investors (MGI) has signed an agreement to acquire the multi-asset business from Kestrel Investment Partners.

As part of the deal, which is expected to be completed in December 2019 (subject to regulatory and shareholder approval), the entire Kestrel multi-asset team will join MGI, including head of desk and lead fund manager John Ricciardi. He will report to MGI’s CEO, Mark Gregory.

Ricciardi is joint CEO of Kestrel, a business he co-founded with the partners of Kestrel Partners LLP in 2011. He has over three decades of multi-asset investing experience, including six years as global head of asset allocation for Alliance Bernstein.

Management of the US$151 million Kestrel Global Portfolio will be transferred to MGI as part of the transaction, as will the associated intellectual property. The fund will adopt the “Merian” naming convention immediately upon completion, with its new name announced in due course.

The fund aims to achieve capital growth by directly investing in a diversified portfolio of asset classes across global markets, using a repeatable process of quantitative macro modelling, combined with fund manager expertise.

The team has an outstanding long-term track record, with the Kestrel Global Portfolio (I USD) delivering a compound annual return of 6.2%, compared to 2.4% for the peer index since inception.

Joining MGI with Ricciardi are portfolio managers Ian Forrest and Dan Matthews. The three fund managers have been investing together for the past seven years, including developing a proprietary macro modelling system. The investment team will be accompanied by three system analysts who have played a key role in evolving the desk’s investment process. 

The acquisition is MGI’s first deal since it completed a management buyout in June 2018 and reflects its attractiveness as a destination for top industry talent, due to its no-CIO policy, strong brand and extensive distribution network.

The deal is aligned with MGI’s strategy to grow and diversify its investment capabilities in asset classes where it can add meaningful value for its clients. Flexible multi-asset strategies are popular with investors seeking to diversify their portfolios.

In addition to growing its existing fund, the new multi-asset team will be launching a long/short strategy in early 2020, subject to regulatory approval. This proposal reflects MGI’s ambition to expand its liquid alternative capabilities, an asset class that is growing in demand among both wholesale and institutional investors.

“For some time, we’ve been looking to selectively expand our investment proposition, aligned with client demand for differentiated, high-alpha active strategies that offer genuine portfolio diversification. The Kestrel multi-asset team’s proven process is hugely compelling and I’m delighted that we’ve signed an agreement to secure its best-in-class business,” comments Gregory.

“The support of MGI’s talented distribution and operational teams will allow us to develop and grow our strategy, while its commitment to having ‘no house style’ will afford us the freedom to manage our products with the flexibility that’s resulted in long-term outperformance for our investors,” says Ricciardi.