Investing in Financials can be a quick way in diversifying quickly. These companies receive money from their customers and then allocate them to different asset classes to generate returns. Whilst they operate similarly, each Investment Manager engages different strategies for where they invest.
Here are 3 ASX Investment Management companies that I'd consider investing in.
Platinum Asset Management Ltd (ASX: PTM)
Platinum is an Australia-based investment manager that focuses only on international shares, providing portfolios of listed companies from around the world on different stock exchanges.
The Platinum share price has started the year well, increasing approximately 9% since January 2019. This appreciation can largely be put down to bullish movements in share prices around the world.
Whilst Platinum have good diversification across a broad spectrum of geographies, there is a large proportion of Asian exposure compared to some of its Investment Manager peers.
Due to the heavy Asian exposure, tensions between the US and China represent a real risk to Platinum shareholders. The rhetoric may partly explain why the Platinum share price is well below its 52-week high of $6.81 per share.
Magellan Financial Group Ltd (ASX: MFG)
Magellan Financial Group is a funds management business based in Sydney that offers international investment funds to high net worth and retail investors in Australia, New Zealand and institutional investors globally.
The Magellan share price has started the year in superb fashion, increasing approximately 44% since January 2019. This was due to an impressive half-yearly report when funds under management increased by 35% to $72 billion.
Magellan runs a different strategy to Platinum Asset Management and has heavy exposure to the US share market. This strategy reflects the longer-term share price movements, as it has benefitted from good returns from the Nasdaq and S&P500 companies.
Challenger Ltd (ASX: CGF)
Challenger is an investment management company that provides a range of product solutions aimed at helping consumers during retirement. These solutions are based around our market-leading annuities that provide regular payments for the chosen investment term, regardless of how markets perform.
The Challenger share price has dropped to begin the year, largely due to releasing softer than expected results as funds under management dropped.
Challenger's strategy sees a lot of the company's revenues derived from retirement products, specifically annuities. The company is set to benefit from Australia's aging population, as it is expected that retirees will naturally look for the types of products they offer.
An Investment Managers success is largely underpinned by the corresponding markets that the portfolios are linked to. It can be a quick and easy way to diversify, as the share picking behind the scenes is done by experts.
I would consider having one of these companies in my portfolio but would consider buying during market shocks, as these shares can be hit particularly hard.