Oaktree Capital Revamps Leadership Structure

Oaktree Capital Management has built out its leadership team, the firm announced Monday, adding a CEO and dividing the chairman position into two roles.

The outgoing head of bailed-out insurer American International Group’s (AIG) retirement business will join Oaktree as a result of the reorganization. The alternatives firm named AIG executive Jay Wintrob as its first CEO, effective November 1.

Bruce Karsh, Oaktree’s president, will join his fellow co-founder Howard Marks as co-chairman of the firm—a position until now held by Marks alone.

Karsh will continue in his role as CIO, the distressed debt specialist confirmed.

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“After nearly 20 years, including the last two and a half as a public company, Oaktree has expanded substantially in terms of assets, employees, breadth and complexity,” Marks said. “It’s time for us to turn to a world-class financial services executive to take our business to the next level.”

He continued to say he is “thrilled that Jay has agreed to take the helm, bringing to Oaktree his intimate familiarity” with the business and “vast experience managing large and complex financial services companies.”

Wintrob has served on Oaktree’s board of directors since 2011. His tenure at AIG and its predecessors stretches back to the 1980s. He announced his resignation last month after being passed over to replace the insurer’s retiring CEO. The job instead went to property and casualty division head Peter Hancock.

As CEO of Oaktree, Wintrob will take the lead on business management and development, the company said, as well as “helping the firm capitalize on its many growth opportunities.”

Oaktree’s assets under management totaled $91.1 billion at the end of June, the vast majority of which (77%) came directly from institutions.

Marks, Karsh, and Oaktree were among the most popular firms and investors cited by the young asset owners on this year’s Forty Under Forty.

Investors are pulling money out of risk assets as the growth they had predicted via central bank activity has failed to materialize, fund flow data has shown.

High-yield bonds funds along with European and emerging market securities saw large outflows in the last week of the third quarter, data monitor EPFR said. The fleeing capital was instead sent to money market and investment-grade bond funds. Flows to these sectors hit their highest levels since the last quarter of 2012 and the first three months of 2010, respectively.

"Investors who began 2014 looking out at what they believed to be the sunlit uplands of accelerating growth are going into the final three months of the year wondering if they'd been looking at a mirage," EPRF's end-of-quarter report said. "Most of the uplands they had pinned their hopes on, ranging from Europe's modest recovery to Japan's aggressive efforts to reflate its economy, are swathed in clouds and another cold front—the end of the US Federal Reserve's current quantitative easing program—is bearing down."

Political and economic uncertainties have concerned investors, especially regarding the position of their equity portfolios. In the three months to the end of September, European equity funds experienced their worst quarterly outflows since the start of the Euro-zone crisis in 2010.

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Investors in US equities took a defensive stance and for the most part rotated out of small and mid-cap stocks to their larger peers, the data showed.

Global equity fund managers bought up financial stocks, increasing their average allocation by 4%.

Investors' love affair with high yield also appears to be over, with investment grade bond funds taking 136% of total flows into tracked fixed income products over the quarter. The figure reflected the offsetting of heavy redemptions from high yield—since July the sector has seen weekly outflows of at least $3 billion five times—and bank loan funds.

Commodities and infrastructure funds also saw gains as investors heard positive noises from the world's largest economies—China and the US—about future projects to sustain momentum in these sectors.