Platinum's FUM dips below $14bn

Platinum Investment Management's funds under management took a $1.65 billion hit to finish at $13.5 billion at the end of April.

Most of the outflows came from an unnamed institutional investor walking away and product rationalisation initiatives totalling $1.4 billion, which has been previously flagged.

This translated to about an $18 million hit to revenue.

A Morningstar note from March calculated the massive mandate loss represented about 9% of Platinum's FUM of $15.6 billion at the time.

Incidentally, Morningstar cut its fair value estimate of Platinum's share price by 20% to $1.00.

"Product limitations make it difficult for Platinum to attract fund flows. Platinum's benchmark agnostic, contrarian investment style and performance deviate materially from global equity benchmarks, preventing its products from making a large proportion of client portfolios, usually benchmark-aware funds seeking to beat the benchmark," Morningstar said.

The fund manager's share price traded just above $5 in 2021. It has sunk to $1.05 at the time of writing.

About $237 million left the Platinum Trust Fund in April, a stable of strategies that include the Platinum International Fund, Platinum Global Fund Long Only, and Platinum Asia Fund.

The Platinum International Fund has been underperforming at 6% p.a. over a five-year basis against the MSCI's 11.2% p.a. Since its 1995 inception, the fund returned 11.3% p.a. while the MSCI delivered 7.8% p.a.

The fund wrote in an investor note that its philosophy has always been to find mispriced stocks and opportunities in areas that are out of favour and away from the crowd.

"We avoid trying to predict which direction the overall market is heading and instead look for attractively valued idiosyncratic business opportunities to invest capital in over the medium to long term," Platinum said.

Newly minted chief executive Jeff Peters unveiled his turnaround plan in March.

The reset phase currently underway will slash costs in a bid to "right size" the business.

It also involves reviewing existing product offerings and distribution channels, the investment platform, and remuneration framework.

The second or "Growth Phase" involves implementing recommendations to further enhance its investment platform; building improved product and distribution capability through new channels; and finalising back-office outsourcing.

Morningstar forecasts that Platinum's FUM will decline to about $10 billion by fiscal year 2028.

Platinum's underperformance relative to its peers also makes a return to net inflows challenging, Morningstar added, noting that its aggregate investment performance lags at least 78% compared to its peers over the one-, three- and five-year time horizons.