The recent struggles of major Australian fund managers like Perpetual, Platinum, and Magellan highlight a shift in the investment landscape. The rise of passive investing and the dominance of superannuation funds are challenging the traditional model of stock-picking expertise.
The ASX-listed giants of funds management were traditionally known for their star stock-pickers, who used their investing prowess to outperform the wider sharemarket. But when it comes to the recent fortunes of some of the biggest names in this sector – such as Perpetual, Platinum Asset Management and Magellan Financial Group – it’s been a rough ride.
Credit: In contrast to the euphoric boom in financial stocks such as banks and insurers, Perpetual and Platinum shares went backwards in 2024 – and over the last three years their slide has been even starker. Since late 2021, Perpetual has lost about 40 per cent, Platinum has lost about 75 per cent, and Magellan is down by roughly half. The huge decline reflects the fact that these businesses are severely challenged by deep-seated changes in how households and super funds invest in the sharemarket. The explosion in passive index funds, and the $4 trillion superannuation sector’s rise, are putting the squeeze on fund manager profits. Most won’t feel any sympathy, of course. Even so, it’s been difficult to ignore the recent turbulence in Australia’s fund management industry. Perpetual, now 138 years old, swallowed its rival Pendal in 2023, only for the widely criticised merger to be followed by private equity giant Meanwhile, Platinum Asset Management And Magellan Financial Group’s funds under management appeared to have stabilised over the year, as it looks to emerge from a tumultuous period. It all raises the question: are we seeing the decline of powerhouse fund managers that rely on stockpicking smarts? And if more consumers are putting their cash with a passive fund or a super giant, how can stock-pickers succeed in this far more competitive field? Some reasons for long-term decline in Perpetual, Platinum and Magellan shares are company-specifi
FUND MANAGEMENT INVESTING PASSIVE FUNDS SUPERANNUATION STOCK PICKING
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