The T Rowe Price Continental European Equity fund faces downgrades as its longstanding manager Dean Tenerelli exits and is replaced by a manager with less than a year’s experience running money.
T Rowe Price confirmed Tenerelli (pictured), who has managed the €117.7m Rowe Price European Equity and €135.1m Continental European Equity funds for over a decade, has decided to leave the firm at the end of the year.
Toby Mueller, who currently runs the European Select Equity Strategy, will become a co-manager on both funds alongside Tenerelli during a handover period starting 1 July. From 1 October he will take over as the sole manager. He will continue managing his existing fund.
Tenerelli joined T Rowe Price in 2000 as an equity research analyst and was appointed co-manager on the Global Equity strategy in 2004 before stepping up to manage the European Equity fund the following year.
His Continental European Equity fund has been in the top quartile consistently over one, three and five years, returning 13.5% over three years compared with the IA Europe Excluding UK sector’s 2.5%.
Fundcalibre yanks elite ranking
Fundcalibre yanked the Continental European Equity fund’s elite rating due to Mueller’s “short but good track record”.
Mueller has less than a year’s experience running money, launching the European Select Equity Strategy last September. It currently has €6.3m in assets under management and is first quartile on a three- and six-month view, returning 3.9% and 6.7% respectively, while the FO Equity Europe including UK has lost investors 2.0% and 3.4% over the same time frame.
“Dean has been an excellent fund manager and it is a shame he is leaving, but we wish him well with whatever he decides to do next,” managing director Darius McDermott said.
“Unfortunately, the fund will have to lose its elite rating with Dean’s departure.”
Fundcalibre will decide whether to put Continental European Equity on its elite radar, a watch list for funds that do not have a minimum three-year track record but are potential candidates for an elite rating in the future, at its annual July investment committee meeting.
Morningstar mulls fund rating
By Thursday afternoon Morningstar had not yet made a decision about whether to downgrade the fund but told Portfolio Adviser Tenerelli’s departure would be a “loss” for the business.
“Tenerelli’s departure will represent a loss of portfolio management experience for T Rowe Price’s European equities strategy, and the approach is likely to change under new manager Toby Mueller,” said Morningstar senior manager research analyst Samuel Meakin.
“Tenerelli’s input has historically been an important factor in our overall conviction.”
The Sicav version of the fund currently has a silver rating from Morningstar.
Though Mueller has limited experience as a fund manager, he has been with T Rowe Price for eight years working as a European equity research analyst, during which time head of international equity Chris Alderson said he has “demonstrated a strong generation of investment insights and value-added performance covering the European information technology, medical technology, and exchange sectors”.
“Given that background he was well placed to manage the European Select Equity strategy when it launched last year,” Alderson explained.
“We are confident that he will continue to build on that strong record for clients invested in our European Equity and Continental European Equity strategies in the future.”