Global equity rout weighs on Platinum Asset Management
Platinum Asset Management has booked a 27 per cent fall in first-half profit, dragged down by the global equity rout of late-2018 and a plunge in performance fees.
Platinum Asset Management has booked a 27 per cent fall in first-half profit, dragged down by the global equity rout of late-2018 and a plunge in performance fees.
Underlying net profit fell to $74.86 million in the six months to 31 December, and total revenue fell 28.49 per cent to $133 million.
Platinum (ASX: PTM) attributed the result to the challenging equity market in late-2018, which caused it to "record an unrealised loss on its seed investments" and "generate little in the way of absolute return related performance fee".
Performance fees were a negligible $22,000 for the half-year, compared to more than $20 million in the prior corresponding period.
Almost half of the Platinum Global Fund is exposed to greater Asia (45 per cent)
Overall average funds under management at 31 December stood at $24.1 billion, representing a fall of 6.3 per cent, driven by a decline in investment performance.
At 2.55pm Sydney time, Platinum down 1.17 per cent, at $5.06 – a slight discount to the Morningstar fair value estimate of $5.50.
Morningstar associate equity analyst Shaun Ler said the result was "no surprise" and in line with expectations.
"Market volatility in the first-half, especially in Q2 with concerns around the trade war, had an outsized influence on the strategy," he said.
Almost half of the Platinum Global Fund is exposed to greater Asia (45 per cent), compared to the Morningstar equity world large blend category average of 16 per cent and the MSCI World Ex Australia benchmark of 11 per cent.
Ler was pleased to see new money coming into the fund particularly during a period of underperformance.
"This shows investors remain confident in management's ability to perform," he said.
Net fund inflows were close to $700 million for the half year, with $163.9 million flowing to the firm's two ASX quoted managed funds Platinum International Fund (ASX: PIXX) and Platinum Asia Fund (ASX: PAXX).
The firm has been in a transitional period since chief executive Andrew Clifford succeeded founder Kerr Neilson last year.
Ler says Platinum could be haunted by the banking royal commission as the firm has a heavier reliance on the retail market – financial advisers and self-managed super fund trustees – for product distribution and uptake than its rival Magellan Financial Group (ASX: MFG).
In the short term, he forecasts no new money flowing into the funds if underperformance continues.
However, he is buoyed by the firm's value strategy in Asia saying it could pay dividends.
Platinum will pay a fully franked dividend of 13 cents per share, down from 16 cents last year.