Is the hell of a year coming to an end for ASX investment companies?

Nick Sundich Nick Sundich, December 6, 2022

ASX investment companies such as Magellan have endured a tough 2022 but is there hope on the horizon for a better 2023? It depends on which company you’re looking at. 

 

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The poster child for ASX investment companies had a hell of a year

Exactly 12 months ago, poster-child ASX investment company Magellan (ASX:MFG) had $116.4bn in FUM – $30.2bn retail and $86.2bn institutional. This morning, it gave a trading update revealing it has $50.2bn in FUM – $20.6bn retail and $29.6bn institutional. Ouch. 

Obviously the investment markets have not performed well, but the issue has been compounded by investors pulling their money – most notably British wealth manager St James’ Place. Magellan been unable to justify the premium fee structure it charges above its peers. 

 

Magellan (ASX:MFG) share price chart (Graph: TradingView)

 

Shares are down nearly two thirds in the last year and while new CEO David George has promised to return FUM to above $100bn, it will be a long way back to the top. 

 

Stagnancy isn’t good either

If you need evidence of just how cold ASX investment stocks are right now, just look at Raiz (ASX:RZI) – a micro-investing platform. Raiz’s share price has been punished just as bad as Magellan even though its FUM has held up. 

 

Raiz (ASX:RZI) share price chart (Graph: TradingView)

 

12 months ago, in December 2021, Raiz just surpassed $1bn in FUM. Today it has a total of $1.1bn in FUM across Australia, Indonesia and Malaysia. Active Customers held up on a global basis but went backwards in Australia from ~292k to ~288k. 

Arguably, investors think there’s little more growth potential in any existing jurisdictions. Perhaps it should quit Indonesia and Malaysia altogether given the cash burn and lack of FUM there – less than 1% and the average customer balance is a paltry A$3.47. 

 

Pinnacle has done better than its ASX investment peers but still down

The final ASX investment company hopeful of a better 2022 is Pinnacle (ASX:PNI). It hasn’t fared as badly from a share price perspective but is still down 40%. It’s Aggregate Affiliate FUM fell 6% to $83.7bn and saw $1.2bn in net outflows during Q1FY22 alone. 

However, its outflows were nowhere near as substantial as Magellan and managed to obtain some net inflows from domestic retail and offshore channels. And despite many of its affiliate fund managers having a tough year, 83% of them have substantially outperformed their benchmarks in the last five years. 

 

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