Elmasry's team to follow him out of Morgan Stanley

We can confirm that star manager Hassan Elmasry's team will leave with him in June to start a new fund management firm.

Christopher J. Traulsen, CFA 24 March, 2009 | 1:40PM
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Morgan Stanley has just confirmed our expectations and announced that star manager Hassan Elmasry will be taking his team with him when he leaves later this year to start his own firm. Investors did get one piece of good news, however: Elmasry's departure date has been extended until 15 June; the firm had previously said he would leave at the end of April.

Elmasry and his team currently run Morgan Stanley Global Brands in the UK and clones of the same fund domiciled in the US, Australia, and Luxembourg, along with US equity versions of the strategy that are sold in that market. We already considered his departure a significant blow to the funds he runs and also to Morgan Stanley's efforts to build

its credibility as an asset manager. However, we wrote in February that we thought there was a "real risk" the team could leave, and that this would diminish the fund's appeal considerably. This has now come to pass as Michael Allison, Paras Dodhia, Jayson Vowles and John Kelly-Jones have all notified Morgan Stanley they will be leaving with Elmasry. In other words, Morgan Stanley will be starting from scratch on these offerings, though they say the funds will "continue to focus on high quality companies with dominant intangible assets that possess inherent sustainable competitive advantages."

For investors here, there would seem to be little reason to stay around once Elmasry and his team set up shop and offer their new funds, assuming that the new offerings carry reasonable fees. Those who don't want to follow Elmasry out may want to note that they can either let Morgan Stanley select their new manager for them, or go out and pick one themselves by finding a new fund. The latter would seem to be preferable given the greater degree of control it offers investors over their money, unless there are tax reasons not to make a move. There are significant numbers of strong global equity funds to choose from, and our qualitative analysts have rated a number of them here.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Christopher J. Traulsen, CFA  is director of fund research, Europe and Asia, Morningstar.