Funds under management at Perpetual fell $1.1 billion to $29.8 billion in the March quarter, the lowest point for two years, as the local share market lost value and institutions withdrew funds.
It was the third negative quarter in 12 months, taking the net flows to -$1.9 billion.
Most of the latest quarter shrinkage was due to falls on the ASX with the Ordinaries Index down 3.6% over the three months.
However, $400 million was also withdrawn, in the form of Australian equities and cash, by institutional investors.
Annualised investment returns for the March quarter were a negative 9%, according to this chart by Deutsche Bank showing the outward flow of funds and the fall in returns:
Deutsche Bank analysts don’t expect a significant improvement soon. They forecast full year funds under management of $30.1 billion, only 1% above March.
“While equity markets are up 1.4% to date in 4Q16, we believe investment gains are likely to be largely offset by year end distributions at 30 June,” write analysts Kieren Chidgey and Virad Mathur in a note to clients.
“With FUM (funds under management) growth having stalled over the last two years and cost savings initiatives and deal synergies coming to an end, PPT needs to establish a consistent record of positive net flows to drive earnings growth and value upside.”
Deutsche Bank has a price target of $43.55 a share and a Hold rating. Perpetual was trading flat at $42.48 today.