It hasn’t been a great 12 months for the Platinum Asset Management Limited (ASX: PTM) share price with the international fund manager seriously lagging behind the rest of its peers.
Unfortunately, the shares have fallen by as much as 4.5% today after the company announced a number of new initiatives aimed at attracting new investors to its international funds.
Platinum has really struggled to grow its funds under management (FUM) over the past couple of years as investors have moved away from expensive active fund managers to cheaper passive index funds and exchange traded funds.
The company has also lost some large investment mandates recently as a number of its funds have struggled to outperform their respective benchmarks.
The net impact of this was clear to see in Platinum’s most recent half-year result with earnings per share falling 20% on the back of shrinking management and performance fees.
Today’s initiatives are aimed at reversing this trend and comprise of two main features:
The first will involve lowering the standard management fees on the Platinum Trust Funds and Platinum Global Fund from 1.5% to 1.35% p.a.
The second initiative will result in the launch of two new exchange traded managed funds (ETMF) in August 2017. This will allow investors to access Platinum’s International and Asian equity strategies via the ASX.
While it is good to see the company is making an effort to get the business back on track, these new initiatives are not guaranteed to attract new funds unless Platinum can start to deliver outperformance.
In fact, the company has noted that these new initiatives could result in FY18 revenues falling by 9% if the lower fee structure is not offset by new fees on the new products or other net inflows.
Are the shares a buy?
Although the shares appear quite cheap, trading on around 15x earnings and offering a dividend yield of 6.2%, I think investors should not rush out to buy the shares today.
Instead, I would prefer to see an improvement in funds under management driven by a sustained period of outperformance that will deliver growth in both management and performance fees.
In the meantime, investors might want to consider some of the better performing fund managers on the ASX including BT Investment Management Ltd (ASX: BTT) and Magellan Financial Group Ltd (ASX: MFG).
These 3 stocks could be the next big movers in 2020
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.
*Returns as of 6/8/2020
The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Platinum Investment Management Limited. Motley Fool contributor Christopher Georges owns shares of BT Investment Management Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.