Platinum Asset Management Ltd (ASX: PTM) has just released its July Funds Under Management (FUM) update and it was an insightful update on the business and global markets.
Platinum Asset Management is an Australian based fund founded in 1994 that is focused on global equities. Platinum was co-founded by one of Australia’s most respected investors, Kerr Neilson who is still the company’s largest shareholder (owning about 40%).
Platinum’s flagship offering, the Platinum International Fund has achieved a compounded return of 12.3% per year since inception (30 April 1995).
This compares very favourably with the MSCI AC World Net Index (in Australian Dollars) which generated a return of 7.1% over the same period. However, in recent years it has dramatically under-performed this benchmark. Over the last five years, the Platinum International Fund achieved a return of 9.7% per annum compared to the benchmark return of 13.1%.
Platinum advised the key reason for their recent underperformance within their Market Update – 19 June 2019 on their website.
To quote directly: “Growth factor has now outperformed value for nine years – this is the longest period in a dataset back to the 1930s”.
Andrew Clifford, Platinum’s current CEO / Chief Investment Officer and Co-founder of Platinum, commented that in his, “30+ years of managing money he can’t remember a time when you could buy so many large cap companies, with solid industry positions on single digit P/Es”.
In July 2019, Platinum experienced net outflows of approximately $108 million. At the end of July, Platinum had FUM of $25.15 Billion.
Platinum’s FUM is dwarfed by competitor fund manager Magellan Financial Group Ltd (ASX: MFG) which had $89.73 Billion FUM at the end of July.
Is It Time To Buy?
In summary, I think the Platinum Asset Management share price is starting to look appetising. At the current share price, Platinum trades on trailing fully-franked dividend yield of 6.6%!
FUM has been in decline on the back of under-performance. However, I believe there will be a time in the next 5-10 years when Platinum’s investment approach again delivers sustained out-performance and FUM will start to lift off.
At the time of publishing, William does not have a financial interest in any of the companies mentioned.