Perpetual ambition raises style concerns
Perpetual Investments’ move to kick-off its own international equities capabilities has raised investment management style issues with another research house today.
The change in management of the group’s more than $2.2 billion in global equities from growth-style Fidelity Investments to Perpetual Global Equities (PGE), which will have a team of value-orientated managers, sees Morningstar places its international equity funds ‘on hold’.
The latest ratings freeze follows a move by Lonsec earlier in the week, which voiced its concern that PGE would adopt a different style to Fidelity.
PGE’s style will be closely aligned with Perpetual value style of stock selection and portfolio construction, Morningstar says, which is “distinctly different” to Fidelity’s growth at a reasonable price (GARP) strategy.
In addition, it says the move from “regional to global sector approach, and a much more concentrated portfolio, means investors and advisers need to consider carefully the new strategy’s place in their portfolios”.
The research house also anticipates PGE to mirror the investment style of Bank of Ireland Asset Management (BIAM), from which Perpetual has signed-up four key staff as the backbone of its new subsidiary,
While placing its international funds on hold, Morningstar welcomes Perpetual’s move as a way of giving it greater control over the performance delivery of its global equities funds.
It says, the outsourced funds have been a “consistent underachiever, both in terms of relative performance, and assets under management growth expectations”.
Perpetual’s flagship fund, Fidelity Perpetual Wholesale International Fund, for example, under-performed the MSCI World Accumulation Index by 2.16 and 1.94 per cent per annum respectively over the three and five years to August 31.
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