ASX-listed fund managers to experience outflows over next few years: Morningstar
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The news: Morningstar is expecting marginal earnings to decline for most ASX-listed fund managers as the majority have underperformed the ASX 200 since the start of 2025.
The context: Morningstar analyst Shaun Ler said unresolved tariffs uncertainties and competition from passive options posed downside risk to earnings and that most funds were losing market share for flows.
He noted that GQG Partners, Perpetual, Magellan and Platinum were likely to experience net outflows over the next three to four years.
Insignia and Perpetual are seen as the best value as Insignia should see slower fee compression, steadier fund flows and scalable cost reductions, while Perpetual should benefit from cost cuts, fund compounding and stable corporate trust earnings.
However, the research house raised its fair value estimate for GQG Partners to $2.10 from $2 and Pinnacle Investment Management to $15 from $14.40.
The GQG upgrade was a result of Morningstar reducing its longer-term outflow assumptions due to flows holding up better-than-expected. GQG’s shares were up 0.48% to $2.10 by market close.
Pinnacle’s upgrade was a result of the group “gaining share from weaker active peers”, its diversified business model and strong performance across its affiliates. While its net flows to date were better than expected, Morningstar warned its shares were overvalued. Pinnacle’s shares edged 0.5% lower to $19.89.
“We believe the market underestimates several risks, including a potential normalisation of flows from presently elevated levels, mean reversion in affiliate performance, and margin pressure from increased investment in staff and distribution to maintain growth,” Ler said.
What they said: On the ASX-listed fund managers Ler said: “We expect medium-term flows to be lumpier than usual as tariff uncertainties persist and rate cuts become more volatile.
“Cost management — such as fund consolidation or downsizing — will likely be a priority among asset managers.”
The source: Morningstar research
