Fund managers

Annoyingly, whilst we own Pendal in our absolute return high conviction portfolio, we don’t own it in the flagship core equity portfolio.

Still, the amount of corporate activity in the space is reflective of the extreme valuations that the funds managers have fallen to.

By far, the big names, like Platinum, Magellan, Pendal, garner the most attention, but Navigator, Regal, VGI have suffered similar falls.

Fee pressures, poor performance, FUM outflows to passive strategies, are all to blame. However, every asset has it’s price.

Hence we’ve seen Regal and VGI look to merge, and Perpetual to have a tilt at Pendal.

Buying funds and capability on the cheap, or getting together for the revenue and opex synergies, makes sense to us.

We’ve been long Platinum, in our direct equity portfolio, thinking it cheap, and thinking it a reasonable market hedge given the low equity beta for the flagship platinum strategy (which has been equitised at ~70%) and the tilts towards Value + Emerging markets (we’ve been long Value, as a DAA tilt, and are comfortable with select EM exposure as a diversifier).

So – nothing much changes for Platinum, but perhaps the corporate activity is indicative of a narrative shift, one in which consensus views listed fund managers as “too cheap”, despite the noted headwinds.

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