A difficult 2015 financial year for the Western Australian economy has flowed through to a soft performance for the state’s listed money managers, according to BNiQ research, with the biggest player considering a restructure to diversify its income sources.
A difficult 2015 financial year for the Western Australian economy has flowed through to a soft performance for the state’s listed money managers, according to BNiQ research, with the biggest player considering a restructure to diversify its income sources.
After a stellar 2014, Katana Capital weathered the storm, among best of the WA players this year.
Katana portfolio manager Romano Sala Tenna said the fund had had only its second year of negative returns in the past decade.
“Last year we did a plus 26 (per cent return); this year we’ve done a minus 2 (per cent),” Mr Salatenna told Business News.
That compares with the benchmark ASX All Ordinaries index posting a slim gain.
Two sectors in particular had weighed the portfolio down, Mr Salatenna said, education and energy.
The company took a position in three or four IPOs in the education sector that didn’t play well, while falling oil prices hit the value of companies such as Santos.
“We’re long-term energy bulls,” Mr Salatenna said.
This financial year had a tough start, too, with one of the highest levels of volatility in August on record.
“Ordinarily I’m an optimist … we’re quite cautious at the moment,” Mr Salatenna said.
Westoz Investment Company and Ozgrowth, both managed by Euroz Securities, also had a difficult year, both with -20 per cent returns.
Euroz managing director Andrew McKenzie said those results were driven by tumbling resources stocks, with the WA-focused Westoz fund struggling to find diversity in the current offering.
That fund’s mandate is for companies with a heavy WA flavour.
Consequently, Mr McKenzie said, the fund had held a strong cash position, with some of WA’s entries in the ASX200 losing around half their value in a year.
He was confident, however, that the performance would get better as other capital managers looked elsewhere with their money and opportunities in WA returned.
Spreading wings
Given the current state of the market, Euroz is moving to diversify its business.
This includes the acquisition of Entrust Private Wealth Management, which will form Euroz’s wealth management division.
“For the past 12 months we’ve been increasingly interested in wealth management,” Mr McKenzie said.
That part of the business will provide consistent earnings, he said, helping smoothing out performance.
Stock broking, too, would provide steady income, while equity capital market work would bring in extra income when the market was ripe for it.
Mr McKenzie said there would be cost synergies between the two companies, including for information systems.
A further move was announced earlier this week when Euroz declared one of its divisions – Westoz Investment Management – would rebrand as Prodigy Investment Partners, as part of a move to appeal to the east coast market.
The fund manager will be 80 per cent owned by Euroz, in comparison to the wholly owned Westoz Funds Management arm.
The company will be seeking to partner with existing players in the market for Prodigy, with Flinders Investment Partners the first to join so far.
Additionally, former MLC chief executive Steve Tucker is involved in the offering.
