Investors take $1bn from Platinum Asset Management

Funds house Platinum Asset Management increased its funds under management by 10 per cent, but its investment performance was the sole contributor.

Platinum Asset Management CEO and CIO Andrew Clifford. Picture: David Swift.

Funds house Platinum Asset Management increased its funds under management by 10 per cent in the first half of the financial year despite investors yanking more than $1bn from its funds over the period.

Funds under management rose to $23.6bn over the half, up 10.6 per cent on June 30 figure, with its investment performance the sole contributor, the listed equities value manager said.

Absolute returns of $3.3bn over the period, equivalent to 15 per cent, more than offset the $1.02bn that flowed out of its funds during the half.

The out-of-favour fund manager had seen a steady flow of money out of its funds in recent years as growth stocks outperformed value.

But a rotation back to value shares in the last months of 2020 has sparked talk of a resurgence of value investing as the global economic recovery gets underway in the wake of the pandemic.

Platinum is seeing the benefits of higher international markets and the Platinum International Fund’s latest update cited the strong run, particularly of companies with cyclical businesses, since the US election and the announcement of successful COVID-19 vaccine trials.

“We are cautiously optimistic in the medium term about the fund’s future returns based on the valuations and outlook for the companies in the portfolio. While we have seen strong stock price appreciation across many holdings, this has occurred in line with the improving prospects that were part of our original investment case for making these investments,” Platinum said.

Despite the prospect of value stocks outperforming growth stocks for the first time in years, investors continued to pull funds from Platinum in the first few weeks of the calendar year.

The fund manager this month reported that funds under management had increased by $220m over the month of January despite net outflows of $221m.

Average funds under management of $22.2bn for the six months through December were 10 per cent lower than the prior corresponding period’s $24.8bn and contributed to a 12.2 per cent decline in management fees for the half, as did a change in product mix, Platinum said.

Revenue rose 8.5 per cent to $166.6m and profit after tax rose 14.3 per cent to $90.4m for the half, with earnings per share coming in at 15.6c per share.

The main driver of the lift in profit was unrealised gains on its seed investments, including dividends, which delivered $36.2m in pre-tax income. This was a big jump on the $7.7m in pre-tax income its seed investments delivered over the prior corresponding period.

Platinum’s performance fee revenues shot up to $3.7m from a subdued $34,000 in the first half of 2019.

They were mainly attributed to the strong performance of its international, Asia and health care strategies.

The value manager declared a 12c dividend per share, fully franked.

Platinum shares rose 5 per cent through the day’s session, to $4.36, before it released the half year accounts.