Royal Commission pressure detracts from performance for WaveStone fund

Royal Commission Banking Royal Commission wavestone wavestone dynamic capital link administration Link Group FE Analytics Brexit data

26 June 2019
| By Laura Dew |
expand image

The impending Royal Commission changes are impacting not just financial firms but individual funds as WaveStone Capital said its holding in Link Administration detracted from performance after the firm issued a profit warning.

In its latest factsheet, the $442 million Dynamic Australian Equity fund said the holding was a key detractor from performance during May after it issued a profit warning at the end of the month, its second in two years.

Shares fell 28 per cent after it stated it expected full year 2019 operating net profit after tax and amortisation would be between $195 million - $205 million, down from $206 million during the 2018 financial year. This was, it said, due to the lack of finality over Brexit and lower levels of business activity in the UK as a result.

Furthermore, Link said it was requiring additional costs in order to manage the scope of regulation under the Royal Commission and Protecting Your Super Package (PYSP).

During May, the WaveStone Capital Dynamic Australian Equity fund lost 0.6 per cent, according to FE Analytics, compared to positive returns of 0.9 per cent by its S&P ASX 300 benchmark.

WaveStone said: “The downgrade [of Link] was primarily attributed to delays in Brexit impacting the group’s UK and European operations. In addition, Link experienced earlier than expected revenue drag from accelerated super account consolidation across its Australian fund administration business.

“Unfortunately this coincided with a period of increased cost as their industry fund clients embarked on increased member communications in response to the Royal Commission and impending regulatory changes.”

Nevertheless, WaveStone said it would retain its exposure to the company in the short term and reconsider in June.

“Whilst the recent downgrade and share price fall has been disappointing, we have retained our ownership and will reassess our investment following their investor day in June.”

Read more about:


Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry



Old Fella

Of course a survey commissioned by an adviser coaching business would find that having an external business coach is a k...

14 hours ago
One foot out the door

A financial planner is expected to earn between $95,000 and $120,000 per year, depending on the state. Really? I don't...

23 hours 44 minutes ago

The whole thing is a bit frightening especially the last note where notes on what might be done could result in the need...

1 day 20 hours ago

ASIC has cancelled the AFS licence of a Sydney wealth firm, the fifth Sydney firm to see a cancellation since the start of the year....

1 week 6 days ago

A former financial adviser has been banned by ASIC from providing financial services for inappropriate advice, among multiple breaches....

4 weeks ago

More than 20 winners from the funds management industry have been crowned at this year’s awards....

6 days 22 hours ago