Perpetual outflow: Don't discount the structural headwinds

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

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Equity Bottom-Up

<ul><li>We continue to believe Perpetual Limited's strong brand, good long-term investment track record and sticky retail funds under management, or FUM, underpin its narrow moat rating, but recent performance of key funds raises concern.</li><li>We believe performance of the core Australian equity funds, the change in portfolio manager of the Australian Share Fund in February, as well as increased volatility in equity markets, will hurt short-term earnings.</li><li>In an environment where investors are increasingly questioning the value-add of active managers as they look to lower investment management costs, underperformance can deter flow for years.</li></ul><p>Analysts: Nathan Zaia and David Ellis</p><p>Full report below the fold....</p>

We continue to believe Perpetual Limited's strong brand, good long-term investment track record and sticky retail funds under management, or FUM, underpin its narrow moat rating, but recent performance of key funds raises concern.We believe performance of the core Australian equity funds, the change in portfolio manager of the Australian Share Fund in February, as well as increased volatility in equity markets, will hurt short-term earnings.In an environment where investors are increasingly questioning the value-add of active managers as they look to lower investment management costs, underperformance can deter flow for years.Analysts: Nathan Zaia and David EllisFull report below the fold....

Poor Returns and Portfolio Manager Change Lead to Lower Fair Value and High Uncertainty on Perpetual

Perpetual Ltd

Poor Returns and Portfolio Manager Change Lead to Lower Fair Value and High Uncertainty on Perpetual