Morningstar’s grim assessment of smaller Platinum | Australian Markets

Analysis and scores home, Morningstar has projected a main decline in funds below management (FUM) turning Platinum Asset Administration into a smaller fund supervisor as a outcome of the exit of co-chief investment officers and portfolio managers, Andrew Clifford and Clay Smolinski.

An evaluation of the state of affairs by Morningstar equity analyst, Shaun Ler noticed the scores home cut its truthful worth estimate for Platinum from 80 cents to 50 cents, noting that the earnings hit from declining price margins could be significantly extreme for Platinum “given its high fixed cost base, primarily wages”.

It mentioned price reductions may partially offset some of this stress, however not all that firm wants to take care of cheap capabilities to operate successfully.

“New initiatives, such as distributing external funds and launching new products, could help moderate the earnings decline. However, these initiatives are early stage, and we expect their overall contribution to be limited in the medium term,” Morningstar mentioned.

“Our base case assumes Platinum shrinks into a smaller fund manager and for after-tax profits to decline 26% per year, reaching $10 million by fiscal 2029, down from $45 million in fiscal 2024. Client redemptions have accelerated, reaching 38% of FUM in the 12 months to January 2025, up from 17% a year prior.”

“Clifford and Smolinski’s transition away from portfolio management responsibilities, combined with staff reductions (a 20% reduction since September 2024) could erode confidence in Platinum’s investment capabilities and team stability, potentially fueling further outflows.”

“We project FUM to decline to $3 billion by fiscal 2029, down from $13 billion in fiscal 2024, driven by net outflows averaging 33% of FUM per year. In dollar terms, this implies annual net outflows averaging $2.6 billion—from $5.7 billion in fiscal 2025 to $1.1 billion in fiscal 2029.”

The Morningstar evaluation mentioned the departure of Clifford and Smolinski represented a materials change, given their long tenures and popularity amongst buyers.

It mentioned Ted Alexander, who will handle the Platinum Worldwide Fund and different international methods, “has a decent track record from prior roles at BML, Orca, Magellan, and Neptune”.

“However, he is not as well-known as Clifford and Smolinski. Alexander will need to demonstrate maintained outperformance over benchmark and peers, and restore confidence among asset consultants—both challenging goals we do not expect to be met in the medium term.”