Morningstar ups Platinum outflows forecast post co-CIO exits
The exit of Andrew Clifford and Clay Smolinski at Platinum has caused “redemptions risks to rise”, according to Morningstar, given the longstanding tenure and brand recognition of the pair.
On 25 February, the firm announced that the pair would step down from their co-CIO and portfolio management roles. Clifford would move to a role in the investment oversight group while Smolinksi will take a six-month leave of absence.
Ted Alexander, former chief investment officer at BML Funds, will take over the pair’s portfolio management duties on the Platinum International Fund, but Morningstar said he lacks the name recognition of the duo.
FUM is projected to decline from $13 billion to $3 billion by FY29, driven by outflows averaging 33 per cent of FUM per annum, which the research house has raised from 20.1 per cent earlier this year.
Reacting to the exit decision, Morningstar equity analyst Shaun Ler said: “Clifford and Smolinski’s departures may see outflows given their long tenures. While there’s a successor, Ted Alexander, team stability and redemption risks have risen. We note investors’ confidence in Platinum was largely underpinned by the former two.
“There is potential for client redemptions. It is likely to take time for investors to gain confidence in Alexander. There may also be concerns about ongoing cost reductions and restructuring – including headcount reductions – across the broader group, which could impact research capabilities.”
A particular factor is the recognition of the pair among domestic retail investors. Clifford is a founding member of the firm since 1994 and a former CEO while Smolinski has worked there for almost 20 years and Morningstar said many will have maintained their holdings on the trust of the duo.
It did not expect Alexander to reach the same presence in the medium term, it said.
“Domestic retail investors, who represent 83 per cent of Platinum’s FUM, are likely familiar with both Clifford and Smolinski, adding to concerns over their exits,” it said.
“Ted Alexander, who will manage the Platinum International Fund and other global strategies, 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.”
Appearing on a results webinar, Platinum chief executive Jeff Peters said the firm has meetings with research houses booked to explain the changes affecting the funds.
AUTHOR
Laura Dew
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