The Australian fund management industry is experiencing turbulence as giants like Perpetual, Platinum Asset Management, and Magellan Financial Group grapple with declining share prices and a changing investment landscape. The rise of passive index funds and the burgeoning superannuation sector are putting pressure on traditional stock-pickers. This begs the question: are these star investors losing their edge in a more competitive market?
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 there is also a broader story about the challenges facing “active” fund managers due to major shifts in how households tend to invest in shares.Chief among these is the massive rise of exchange-traded funds , vehicles that allow people to cheaply invest in a wide selection of stocks at a much lower cost than paying a stock-picker.
“Just looking at how active managers are performing today, I think that the trend will continue,” he says. “It’s been a tough time for many active fund managers to perform well, particularly value-style managers,” Tagliaferro says. “I think a lot of people would say many valuations don’t make a lot of sense because it’s really driven by the weight of money, rather than an upgrade in earnings.”Despite the tougher backdrop for the likes of Magellan, Platinum and Perpetual, the overhaul in funds management is arguably a good news story for consumers.
“People just want to see their money compound,” he says. “They are going for index funds and ETFs because these vehicles provide a better proposition.”
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