Masters of the Australian market brace for more job cuts

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Toe-cutters are holding our masters of the market’s feet to the fire – and some cannot withstand the heat.

Already a subscriber?When you see First Sentier shutting what was once the best fixed income strategy and team in the country,in a quarter and Macquarie’s equities desk trading a $1 billion-plus growth equities transition portfolio all at about the same time, you can be sure there is blood on the streets.

“Each of teams are delivering good outcomes for clients, but not able to attract enough assets at the right fees,”. “We’ve made difficult decisions to call time on them, so we can focus on businesses that do make a difference.” Businesses that do make a difference are bigger and/or more profitable: for First Sentier, that includes its Australian growth and small cap equities teams and private markets.

So, on aggregate the old world is shrinking. We can see that through ASX-listed groups like Magellan Financial, Platinum Asset Management and Perpetual. The one that bucks the trend is GQG Partners, a newer global equities manager thatand is growing like a weed. Part of its growth has come at the expense of older competitors.

– active fund managers are the natural buyers, even if they only account for only one-third or one-quarter of daily trading volumes. It’s hard to sell an index-less IPO to a passive fund manager and/or its computer model.It is the same for underwritten equity raisings. Two decades ago, there were four big players in Australian equity deals: BT , AMP Capital , Colonial First State GAM and Perpetual.

If we go back to Rainmaker’s data and look at its sample of about 80 active large cap international equities funds, only 23 per cent beat their benchmarks in the five years to December.

 

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