K2 AM restructures after severe hit to assets
K2 Asset Management has undergone a significant restructuring process following a downturn in assets under management which it says will see the firm stay solvent for the next decade.
A year ago, total assets under management at the firm were $305 million but, according to data filed with the Australian Securities Exchange (ASX), this was down to less than $100 million this month.
On its flagship Australian Absolute Return fund, assets fell from $189 million in April 2019 to $19 million, partly due to the loss of a mandate in September, 2019.
From 1 April, 2019, to 31 March, 2020, the Australian Absolute Return fund lost 26.3% versus losses by its ASX All Ordinaries index benchmark of 15.5%.
The period also saw the closure of the K2 Global Equities fund which ceased operation on 29 November, 2019 at $3.6 million in assets.
K2 AM head of research George Boubouras, who joined the firm in January, 2020, said the firm had been undergoing a restructuring process and was now better positioned for the market.
This process began in the second half of 2019 and saw a lot of costs of the business stripped out including by outsourcing wholesale marketing with Principals Fund Management which gave K2 greater depth of coverage with lower costs. The retail strategy would also be separate and include active ETFs.
Boubouras said: “The business has been ringfenced with a strong cash buffer, we are well-placed to fund the business for the next 10 years and well-positioned to grow it in a sustainable way. The timing of the restructure was fortuitous.
“We are in a very strong position for K2 2.0 going forward as we enter the challenges of higher market volatility in the years ahead where active funds management will once again begin to illustrate the benefits – with lower volatility – to investors.”
The firm currently ran five funds; Australian Absolute Return, Asian Absolute Return, Global High Alpha, Australian Small Cap and Select International Absolute Return.
AUTHOR
Laura Dew
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