Pendal to close Enhanced Credit fund

Pendal has announced the closure of its Pendal Enhanced Credit Fund, set to terminate on 2 December.

The fund, which is an actively managed portfolio of primarily Australian corporate bonds, was $131 million in size as at 30 June.

However, this “small” fund size meant that it could not be managed in a cost-efficient way, according to Pendal.

“We also consider that the fund has little prospect of significant growth in funds under management in the foreseeable future,” it said in an update this week.

“If the fund were to continue, the fund’s size would result in higher management costs for investors, which would reduce their investment returns.”

Pendal confirmed that applications will no longer be accepted for the enhanced credit fund, and that as soon as practicable, following 2 December, it will begin winding up the product.

This will mark Pendal’s third fund termination this year. In March, it closed up the Pendal Geared Imputation Fund after it saw consecutive outflows over a number of years.

In June, the firm also wound up the Pendal Balanced Return Fund, which similarly to the enhanced credit portfolio, faced cost inefficiencies and had little prospect for future growth.

However, parent company Perpetual, since finalising its acquisition of Pendal last year, said that the asset manager brings a number of strengths to the group.

“The Pendal Group acquisition has brought to asset management complementary strengths in key strategies, regions and operating capabilities. Combined with Perpetual’s pre-existing asset management business, the Pendal acquisition provides a global, scalable growth platform for asset management,” it said in its full-year results last month.

In fact, Perpetual’s asset management business generated revenue of $887.6 million in FY24, 48 per cent higher than the prior corresponding period. This, it said, was largely driven by the $256.9 million contribution of Pendal’s boutiques.  

Perpetual also recently added that while it has yet to maximise the value of its more recent acquisitions, particularly that of Pendal, it is “confident that the strength of the brands, together with their exceptional investment teams, will underpin long-term growth for our asset management business”.