Home Business Markets How this Aussie fund manager’s ‘big China bet’ backfired

How this Aussie fund manager’s ‘big China bet’ backfired

"At the end of the day performance is what drives flows."

Aleks Vickovich

Digital Editor, Your Money

Platinum Asset Management has historically been one of Australia’s most successful (and expensive) boutique investment firms, turning its founder Kerr Neilson into a billionaire and finance industry legend.

But, at least for now, the good times seem to be over at Platinum, with the ASX-listed fund manager announcing an unrealised loss on investments for the half-year to 31 December 2018 which subsequently saw its share price decline by almost 5 per cent in Wednesday’s trade.

Platinum’s poor results come alongside a strong performance by its historical global equities rival Magellan Financial, which has reported an increase in funds under management and seen a 10.3 per cent rise in its stock.

Speaking to Trading Day, Bell Direct analyst Julia Lee said fund managers were feeling the full force of global market volatility and their decisions to focus on different geographic locations.

“It really does demonstrate the last four months and the difference that volatility and asset allocation can make to returns of fund managers,” she said.

Lee said Platinum’s exposure to Asia has been a contributing factor in its under-performance, while Magellan has been a beneficiary of a buoyant US market.

Reuters has also pointed to Platinum’s “big bets on Chinese and Asian growth”, with fellow fund manager Chad Slater of Morphic Asset Management telling the newswire that investments in the far east are to blame.

“I can see why they bought it (China). They’re contrarian, they like value and China was cheap,” he said. “I can see why they held it, so I wouldn’t begrudge the idea, but at the end of the day performance is what drives flows.”

Watch more analysis from Julia Lee in the video above.

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