What: International equities fund manager Platinum Asset Management Limited (ASX: PTM) has announced a 2014 profit increase of 47% and a funds under management (FUM) increase of 16.7%. However the FUM increase was largely due to investment returns, indicating many Australian retail investors and SMSFs are not yet into international equities in a significant way. In the longer term, this is troubling as offshore markets offer depth and opportunities unavailable on the ASX.
So What: Over the past 19 years Platinum’s flagship International Fund has appreciated an average 13.01%pa – easily outperforming the benchmark MSCI World Index (5.6%pa) and the Australian All Ordinaries Accumulation Index (9.34%pa). Sector specific funds (Healthcare, Technology, Asia, Japan, Europe and International Brands) have also performed strongly over the periods since being established.
Platinum is no index hugger and is constantly looking for well priced opportunities in neglected markets or sectors, which can often mean periods of underperformance as well. Therefore both the management company (PTM) and its funds need a 3-5 year view to do them justice.
Other quality asset managers such as Magellan Financial Group Ltd (ASX: MFG) and Henderson Group plc (ASX: HGG) have their own distinct strategies and don’t operate in quite the same space as Platinum; so any comparison would be unfair to all.
In an interesting statement Platinum is very critical of the recent watering down of financial advice legislation and believes general investors will be ill served by the thoughtlessness behind this manoeuvre. To counter this slightly Platinum is joining its managing director Kerr Nielsen in funding 20 scholarships ($15,000pa) at five universities with the proviso they are only awarded to those majoring in financial planning.
Now What: Platinum Asset Management ($6.40) is selling at 19.7 times 2014’s earnings and carries a 5% fully franked yield. However I don’t like to judge asset management companies on these criteria alone. Of more importance is the leverage available in the quality of management and their stock-picking ability – Platinum scores very highly on both counts. Another plus is the ability to transfer funds from mature markets to undervalued markets when warranted.
In my view Platinum Asset Management is a solid longer-term buy.
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Motley Fool contributor Peter Andersen owns shares in Henderson Group PLC, Magellan Financial Group and Platinum Asset Management