Platinum Asset Management reports a profit drop of 37pc

Platinum has predicted a rebound in retail gross flows despite the fund manager posting a 37.4 per cent slide in its interim profit.

Platinum Asset Management chairman Andrew Clifford. Picture: David Swift.

Platinum Asset Management has tipped a rebound in retail gross flows even as it posted a 37.4 per cent slide in interim profit on the back of a decline in funds under management.

For the six months through to December 31, the value manager reported net profit of $37.6m. This compares with the $60m it posted for the same period last year.

In an update to the market after the close, Platinum said the profit drop was largely due to a decrease in management fees as a result of lower average funds under management.

“In addition, performance fee revenues decreased by $2.5m compared to the previous corresponding period due to weaker absolute investment performance,” the fund manager said.

By the end of December, total funds under management stood at $18.2bn, in line with the June 30 figures, as net outflows of $1.1bn were offset by positive investment returns of $1.1bn through the half.

The positive investment returns were primarily from Platinum’s Global long short investment strategy, which returned 9 per cent over the period.

Average FUM for the six months to December 31 was $17.8bn, a 20.9 per cent drop on the $22.5bn average for the prior corresponding period.

Total revenue was $99.3m for the period, a 26 per cent decline, while management fee revenues fell 24 per cent as average FUM went backward.

The profit fall comes as Platinum enjoys a long-awaited revival after underperforming the market through the Covid-19 boom.

Of eight Platinum Trust Funds, seven outperformed their benchmarks in 2022, with the healthcare fund the sole detractor.

Its flagship international fund outperformed by 15.6 per cent over the year, while its Asia, technology, Japan, global long only and brands funds all posted returns that were at least 4 per cent above benchmarks.

After years of outflows due to consistent underperformance, Platinum said outflows were slowing and that retail gross flows are “set to rebound”.

The December half net retail outflows slowed by 54 per cent versus the June 2022 half, giving it the best half in terms of retail outflows since 2018.

The update from Platinum comes as chairman Andrew Clifford last month told The Australian he expected to see a turnaround in flows through the year.

“It will take some time for the marketplace to realise just quite how good our numbers are,” he said in an interview.

“So, an immediate turnaround? Perhaps not in the first half of the year, but as the year progresses, I would, consistent with history, expect there to be an improvement in flows.”

Platinum shares are up 30 per cent year to date as investors watch the fund manager’s turnaround.

But Morningstar analyst Shaun Ler is not so optimistic. After cutting Platinum’s fair value in January, Mr Ler said any turnaround in flows would likely be short-lived.

“We assume Platinum will see some net inflows in fiscal 2024-25 before reverting to net outflows thereafter,” he warned.