Perpetual Limited (ASX: PPT) has released its funds under management (FUM) update for Q1 FY20. Is it time to sell Perpetual shares?
Perpetual is a diversified financial services company that has been operating for more than 130 years. Perpetual has three business units: Perpetual Investments, Perpetual Private and Perpetual Corporate Trust.
First Quarter Results
Perpetual reported that total FUM at 30th September 2019 was $26.1 billion, down $1.1 billion or around 4% on the previous quarter.
The $1.1 billion decrease comprised $1.8 billion of net outflows and market appreciation of $0.7 billion. Most of the outflows were from Australian equities.
Funds have been withdrawn from Perpetual even while Australian equities have been rising, however, there has been increased volatility lately and several large market falls. This volatility could have been a contributing factor to the outflows.
Is It Time To Sell Perpetual?
I wouldn’t advocate for any big investment decision based on such a small amount of data. I would simply say it’s something to keep an eye on and see whether FUM recovers or continues to fall over the next quarter.
However, it should also be noted that FUM declined in FY19 from $30.8 billion to $27.1 billion, around a 12% fall. Taking this quarter of data with FY19 results, it starts to paint a slightly more concerning picture.
My concern would be that Perpetual’s value investing style continues to underperform growth shares in FY20 which could lead to further outflows.
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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).
Disclosure: At the time of writing, Max does not have a financial interest in any of the companies mentioned.