Is the Pendal Group Ltd (ASX: PDL) share price a buy after revealing its September 2019 funds under management (FUM)?

Pendal Group is the new BT Investment Management. Having moved away from Westpac Banking Group (ASX: WBC), Pendal is now one of Australia’s largest fund managers, with more than $100 billion invested across its business.

Pendal’s September 2019 FUM

The fund manager reported that its total FUM was down 1% for the quarter to $100.4 billion from $101.3 billion at June 2019.

Total Pendal Australia FUM fell by $0.1 billion on net outflows of $0.9 billion and positive market gains of $0.8 billion. Low margin cash outflow was $0.4 billion and Australian equities outflow was $0.3 billion.

Total JOHCM FUM declined by $0.8 billion but it suffered $1.4 billion of net outflows.

Pendal said that the above outflows were primarily from the European and UK OEIC funds and the Westpac book. However, it continues to experience good inflows from the US pooled funds – during the quarter there was a $0.5 billion net inflow from this segment.

The overall FUM decline of 1% was despite a useful $1.2 billion boost from a lower Australian dollar.

Pendal warned that the annualised effect of the quarterly flows on Pendal Group fee income is a reduction of $11.2 million.

Is The Pendal Share Price A Buy?

Over the past two years the Pendal share price is down around 40%. It’s not as though there was a single large drop-off of the share price, it has been steadily going lower over the past two years.

It’s a problem that many high-fee fund managers face. A lot of new money is headed towards low-fee exchange-traded funds (ETFs) operated by entities like Vanguard and Blackrock.

Unless fund managers deliver regular outperformance after fees it’s going to be quite hard for them to attract new funds. I don’t want to buy Pendal for this reason, I’d rather buy the reliable shares in the free report below instead.


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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).

At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.