Believe it or not, there are some potential ASX share winners from the Royal Commission. We all know that Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ), National Australia Bank Ltd (ASX: NAB) and AMP Limited (ASX: AMP) have suffered reputational damage from the spotlight. Other businesses like Freedom Insurance Group Ltd (ASX: FIG) and IOOF Holdings Limited (ASX: IFL) have seen their share prices drop substantially since the start of the Hayne inquiry. Steve Black from Pengana Capital Group has identified a few areas where there may actually…
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Believe it or not, there are some potential ASX share winners from the Royal Commission.
We all know that Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ), National Australia Bank Ltd (ASX: NAB) and AMP Limited (ASX: AMP) have suffered reputational damage from the spotlight.
Steve Black from Pengana Capital Group has identified a few areas where there may actually be winners from the Royal Commission:
These businesses currently only have 4% of the $850 billion market. Around 20% to 30% of the $850 billion is money that advisors receive trail commissions on, but once scrapped it could encourage some money to move onto other platforms.
Independent fund managers
Independent fund managers are likely to see increased fund flows as advisors and investors seek better alignments of interest.
One suggestion by Mr Black is Pinnacle Investment Management Group Ltd (ASX: PNI), the boutique fund manager is running 12 separate capabilities that has grown funds under management (FUM) from $10 billion to $47 billion over the last six years. Its high-performing funds and co-ownership with the fund managers result in the retention of key people.
Finally, Mr Black pointed out that the independence of corporate trustees will be under the spotlight. EQT Holdings Ltd (ASX: EQT) provides low-cost, independent alternative products to the banks.
These are all good suggestions, particularly the independent platforms. However, some investors believe some of those shares are overpriced. For example, Netwealth is trading at 57x FY19’s estimated earnings, which is more expensive than some tech shares like Altium Limited (ASX: ALU).
There will definitely be some winners from the Royal Commission, but it’s important to pay the right price for them.
Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Praemium Limited. The Motley Fool Australia owns shares of National Australia Bank Limited. 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 Scott Phillips.