Morningstar claims more funds needed at Perennial
Perennial Investment Managementmust increase its international equities funds under management (FUM) in order to remain viable over the long-term according to research houseMorningstar.
According to the research house the group has been a strong performer over the past three to five years, but has made the claim after completing a review ofIOOF’s international funds, which Perennial has managed since 1999 using its ‘growth at reasonable price’ (GARP) strategy.
Morningstar argues that with $110 million in FUM, “Perennial needs to grow funds under management in international equities significantly to achieve the economies of scale necessary to ensure its business is sustainable in the long-run.”
Of the $110 million Perennial manages in international equities, $10 million is invested indirectly through its Japanese Equity Trust.
The review by Morningstar resulted in an moderate rating of three for IOOF/Perennial - with one being the worst and five the highest.
The partnership was branded ‘strong’ on performance with the IOOF Flexi Trust outperforming its benchmark by 4.12 per cent (net of fees), however the research house deemed Perennial’s compliance to be ‘weak’ as “each regional portfolio manager is responsible for trading and execution for their particular region”, which Morningstar claimed was below market best practice.
IOOF/Perennial was branded ‘average’ in all other assessed areas, which included investment process, portfolio construction and execution, process development and review, investment team and risk management.
Perennial's investment philosophy is based on the premise that markets at times tend to 'overshoot', and that Perennial can take advantage of these short-term market valuation 'inefficiencies' as a long-term investor.
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
