Fred Alger has lost another mandate, although the firm stresses that the its replacement by John McStay Investment Counsel in Ameritas' Small Cap variable annuity is not based on its loss of investment professonals in September's World Trade Center attack.

Ameritas officials claim that the decision to make the move was based on poor investment performance by Alger and that it predated the September attacks. Alger had fallen to the bottom quartile of its peer group and failed to improve performance after a probationary period. That triggered the replacement, according to Ameritas officials.

Yet the SEC filing made by Veritas cites "investment management staffing and the portfolio managers’ respective experience and qualifications." It also cites performance and cost as factors in the decision. The decision effects $90 million of assets managed by Alger.

One clue that performance may be the more important issue than staffing is that Alger remains the subadvisor on a number of other products offered by the insurer, including its Growth & Income, Growth and Mid Cap Growth portfolios.

Veritas, a unit of American International Group, is the third distributor to drop Alger as a subadvisor after the attack.

Alger Management also manages the Ameritas Growth, Mid Cap Growth, and Income & Growth portfolios in the Calvert Variable series. Calls to Ameritas, Calvert, and Alger Management were not returned by presstime.  

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