Perpetual swings axe on two funds

Perpetual is swinging the axe on two of its global funds as it digests costs associated with its $2.5bn takeover of Pendal Group.

Perpetual, like many of its active rivals, is struggling to attract new dollars and retain existing investors.

Perpetual Investment Management is swinging the axe on two of its global funds as it digests increased costs associated with its $2.5bn takeover of rival fund manager, Pendal Group.

Pendal Concentrated Global Share Fund, run by Pendal’s head of global equities Ashley Pittard, will pass its $600m in assets to Perpetual-owned Barrow Hanley near the end of October.

Mr Pittard and senior analyst Sue Scott will depart the company at that time.

Perpetual is also winding up its Perpetual Global Innovation Share Fund. The tech fund was closed because it wasn’t expected to attain the scale required to remain viable “particularly in terms of investment and operating cost efficiencies”. Technology PM Thomas Rice is also set to depart.

A Perpetual spokesman said the changes follow a strategic review of its global equity capabilities.

“As part of a large global asset management business we must continually look at ways to leverage the strengths and scale of the broader Perpetual Group, to ensure we have a range of differentiated and competitive offerings in the Australian market that we believe will deliver the best outcomes for our clients,” he said.

The Global Innovation Share Fund will close on 24 October and Barrow Hanley’s proposed appointment commences on 31 October. Both the current Perpetual and Pendal teams will continue to manage their respective funds to ensure an orderly transition, the spokesman said.

Both announcements were communicated to investors and clients on Wednesday.

The move comes after Perpetual last month reported a 42 per cent drop in annual profit after its takeover of Pendal.

Net profit fell to $59m for the year ended June 30 from $101.2m a year earlier. However, underlying profit rose 10 per cent to $163.2m as operating revenue soared 32 per cent to $1.01bn.

Perpetual, like many of its active rivals, is struggling to attract new dollars and retain existing investors because of a growing trend towards lower-cost and often better-performing index funds.

The Pendal takeover, which was completed in January, was sold as a way of achieving scale but so far the company has experienced worse than expected funds outflows, reporting a drop of $5.1bn in July even as 79 per cent of its funds outperformed their benchmarks on a three-year basis.

Chief executive Rob Adams recently took on an expanded role under a restructure announced last month. He now has a dual role as CEO of asset management, without an increase in pay.

In July, Perpetual announced FUM net outflows of $2.3bn for J O Hambro, $0.3bn for Barrow Hanley, $1.2bn for Pendal, $0.4bn for Perpetual, $0.1bn for Trillium, and $0.9bn at TSW.

Perpetual shares rose 0.6 per cent to $20.11 early on Thursday.