Platinum sees 11% FUM decline after heavy insto redemptions

Platinum Asset Management saw outflows of $1.65 billion in April, partly as a result of redemptions from institutional mandates and product rationalisation initiatives.

In March, the firm said it expected to see $1.4 billion in expected outflows. Some $200 million was lost in March and the remaining $1.2 billion was expected to be redeemed in April. 

However, they were higher than expected in the following month with the firm losing $1.4 billion from institutional mandates and product rationalisation initiatives during April, an additional $200 million than forecast. 

It lost a further $237 million from its Platinum Trust funds. 

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This brought overall outflows to $1.65 billion during the month which caused total funds under management (FUM) to fall from $15.5 billion to $13.7 billion, a decline of 11.6 per cent. 

A year ago, the firm had $18.4 billion in FUM and announced a two-part “growth and reset” strategy to focus on improving fee revenue and funds under management. 

In a shareholder letter, chief executive Jeff Peters said the strategy will cover:

•    A reorganisation of the research function within the investment team to improve its effectiveness.
•    A review of how it constructs each portfolio of stocks.
•    A review of how it approaches risk management processes, including shorting and cash positions.
•    An examination of existing product line features.

Earlier this week, a global survey by Northern Trust found almost 70 per cent of managers are looking to control costs at their firms via product rationalisation. A further 83 per cent said they will change their product strategy over the next two years as they pivot their strategy to ensure a best-in-class experience for clients.

During the month, the firm announced its two listed investment companies, Platinum Asia (PAI) and Platinum Capital (PMC), had been put under strategic review. The funds’ strategic review will consider options to build scale, including whether it should be converted into an open-ended fund structure allowing investors to trade at or close to net asset value.

In statements to the ASX for each of the funds, Platinum said: “Over the last couple of years, the board has observed a trend away from closed ended investment vehicles, particularly those that lack sufficient scale to generate the liquidity required to maintain share prices close to the underlying net tangible assets.

“Unfortunately, [the funds] have not been immune from the effects of this general market sentiment.”