Platinum Asset Management shares are taking a big hit

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Shares in Platinum Asset Management fell hard after the funds manager announced a cut in fees.

A short time ago, the shares were down 8% today to $4.28, falling 14% since Friday.

Analysts estimate the cut in the standard management fee to 1.35% from 1.50% will reduce Platinum’s fee income by between 9% and 10%.

“We see the cut in fees as part of a downward spiral for the firm,” says Bell Potter in a note to clients.

Bell Potter says Platinum lost $3 billion in fund flows for calendar 2016.

“We estimate this has continued into calendar 2017 with over $1 billion being lost for the first three months of this year,” the broker says.

“The disappointing relative performance of some funds, coupled with some key staff departures and now a reformatted fee structure may in fact cause existing investors to reassess their investment allocation to PTM (Platinum Asset Management) altogether.”

Bell Potter has a hold recommendation and a price target of $4.20 a share, down from $4.90.

Macquarie has Platinum on neutral with a 12-month price target of $4.39, down from $4.93.

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