Platinum Asset Management’s flagship fund, the Platinum International Fund, has had its gold rating confirmed by Morningstar. In a review published last week, Morningstar says Platinum has had to deal with personnel and performance issues in recent years but the fund “still towers over the pack.”
The $10.6 billion fund has around 70 per cent of its holdings in developed markets and 30 per cent in emerging markets. It is a big investor in China, which accounts for 19 per cent of its holdings, Japan (16 percent), South Korea (10 per cent) and India (eight per cent). Less than 15 per cent of its holdings are in the United States.
Over the 12 months to the end of April the fund produced a net return of 15.8 per cent, compared with a 16.9 per cent return for the MSCI World ex-Australia Index.
Over three years to the end of April that fund has produced an average net return of 11.4 per cent a year, compared with an average return of 13.7 per cent a year for the index.
Since it was launched in 1995 the fund has produced an average return of 12.6 per cent a year, compared with an average return of 6.5 per cent a year for the index.
Platinum invests for absolute return rather than benchmark-relative performance. Its portfolio often exhibits exposures to sectors or regions that are out of line with index weightings. It uses risk mitigation tool, including short-selling and active currency hedging.
Morningstar says: “This strategy has endured its share of bumps since 2011. Digesting the fund’s relative underperformance over more intermediate periods isn’t easy. However, it is at least partially a by-product of Platinum’s well-tested value-sensitive style, one it hasn’t wavered on and that is visible in its conviction in less explored Asian and emerging markets.
“[Founder] Kerr Neilson and company have always been unafraid of ignoring convention, so wildly divergent returns shouldn’t surprise. Reassuringly, the stock research remains thorough and overall portfolio risks are managed prudently.”
Platinum has suffered some senior staff losses in recent years and questions are being asked about how much longer Neilson will remain actively involved.
Morningstar says: “We’re heartened by the firm’s proactive response. The increasing share of this fund managed by Platinum stalwart Andrew Clifford is no surprise. We respect him highly.
“Clay Smolinski has taken on a small share of this vehicle and is among the impressive line of promising investors Platinum has promoted over the years.”
Last month Platinum announced that it would cut the fees on its funds from 1.5 per cent to 1.35 per cent. It is also introducing a performance fee option, with a management fee of 1.1 per cent and an outperformance fee of 15 per cent of the return above a nominated benchmark.
Morningstar says this change to fees is welcome, although the fund will remain “relatively expensive”.
Platinum also announced last month that it would launch two new exchange traded funds later this year. The new products will allow investors to access Platinum’s international and Asian equity strategies through the Australian Securities Exchange.
The new funds will be set up as feeder funds into the existing unlisted Platinum International Fund and Platinum Asia Fund.
