Artio Global Advisors to slink away, sell what's left to Aberdeen

BobC

This is not surprising. I have never seen a company go from small-but-mighty to big-and-growing to fallen-on-hard-times to giving-up-the-ghost in such a relatively short time span. It wasn't that long ago that Artio International Equity Fund was as good as it gets. I will be curious to see if there is any kind of autopsy done after the closing that will provide real insight into what happened. Right now, I have some pretty good ideas, but they are just guesses. Pell and Younes were the wunderkinds of international fund managers for a number of years. Now they will not even remain with the new company. Of course, there is not much left to manage. No word on what will happen to Artio Total Return Bond Fund, which has continued to do well, despite loss of assets. Sareholders of Artio (ART) have seen share prices plummet in three years from $30 to $2.10 (yesterday). What a mess.

This morning it was announced that Aberdeen Asset Management PLC ("Aberdeen"), a global asset management firm based in the UK, agreed to acquire Artio Global Investors Inc. ("Artio Global" or "Artio") for $2.75 in cash per share. While this e-mail is coming to most of you in the middle of the night, I wanted to be the first to inform you of the transaction and provide you with as much information as possible at this time.

With the decline in our assets under management over the last couple of years, we felt that there would be significant benefit in partnering with an organization like Aberdeen, which has vast financial strength and a global footprint of analytical resources. We are confident today that this transaction is in your best interests.

Aberdeen was formed in 1983 and as of December 31, 2012 had over $314 billion in assets under management. The firm has offices in 23 countries including the US where Aberdeen operates as a registered investment advisor.

Like Artio, Aberdeen is focused on institutional and intermediary clients and has core competencies in international and global equity as well as fixed income. In addition, Aberdeen offers property and tailored solutions. They have an extensive network of 500 investment professionals located around the world.

Given the similar investment-centric cultures both firms follow, Aberdeen believes that Artio's High Grade and High Yield strategies will complement its existing capabilities. At the closing of the transaction, it is anticipated that Aberdeen will add Artio's High Grade (Total Return Bond) and High Yield teams to its core fixed income capabilities. Both these fixed income groups will benefit from the increased resources Aberdeen offers. Richard Pell and Rudolph-Riad Younes will continue to manage our International and Global Equity strategies through the closing of the transaction at which point Aberdeen will take over management responsibilities, subject to client consent. After the transaction closes, it is currently expected that they will not transfer to Aberdeen.

The transaction is subject to customary closing conditions, including US antitrust approval, the consent of a majority of Artio Global's shareholders and the consent of certain Artio Global mutual fund shareholders. The transaction is currently expected to close by the end of the second quarter or early in the third quarter of 2013.

NumbersGal

On the other hand, if there are any Aberdeen funds one likes, all of which have a load, buying the comparable Artio fund, and hoping for a merger, would be a way to get grandfathered in the no-load class.

I have looked at times at GEGAX (institutional class is ABEMX), but there doesn't seem to be a comparable Artio fund. One might guess about whether or not Artio's International Equity BJBIX (no load) will merge into Ardeen's International Equity GIGAX (load) - or one might not even care as Sextant International does almost as well with tons less risk.

Artio's Global High Income BJBHX might interest some -- it's a bit like jalapeno peppers (use sparingly.)

msf

Reply to @NumbersGal:
While it seems to be rare, sometimes funds are acquired with no grandfathering - not only does one not have noload access to other funds in the now load family (that's not uncommon), but the acquired fund itself is only available with a load even to existing shareholders.

See this thread on Turner Int'l Growth.

Here's Artio's Business Wire release.

What BobC posted about Pell and Younes seems ambiguous. It is standard for an acquiring family to assume legal management of the acquired funds. Day to day management is another matter. The new "manager" (i.e. acquiring fund company) can: (1) enter into a contract with the old management company (i.e. the "real" managers) to continue, (2) it can hire the old managers into the new company and manage the fund directly, or (3) it can hire new managers (or use its own stable of managers).

It seems clear that Aberdeen isn't doing (2), but whether it is doing (1) or (3) isn't obvious to me. Maybe I'm just being dense and Pell and Younes are gone.

BobC

I don't think there is any question about their status, based on our discussions with Artio. They will manage until the takeover is official, and then they are gone. Of course, this could change. But given their lack of success the last four years, it seems unlikely they will continue with the fund, whatever it will be called. And the loss of assets, from $11 billion in 2007, to $800 million now, has to be a factor. Again, I just do not understand what happened. Artio Global Investors has lost 90% of its value in five years. I know the person who brought the International Equity Fund to market more than 10 years ago. He, too, does not understand how this happened.

Investor

Reply to @NumbersGal: BJBHX was one of the funds that I invested in this fund family a number of years ago. I liked the global aspect to HY exposure and their HY team was pretty risk averse. Too bad Artio is sold to a load family.

msf

Reply to @BobC:
Thanks. I was guessing as much, but there was that nagging ambiguity.

Doesn't seem to be worth hanging around in the hope of getting access to Aberdeen funds w/load waived. Some spot checking:

Asia Bond Fund A (AEEAX) - load waived at Vanguard
Asia Pacific A (APJAX) - load waived at Vanguard
Emerging Markets Institutional A (GEGAX) - load waived at Vanguard

etc. You get the idea.

Shostakovich

Reply to @BobC: Wife is still in Total Return Bond. She forgot to mail her transfer of assets form in. I hope the fund doesn't blow up before we can get her over into something like DODIX.