The closure of a number of fund management firms due to poorer market conditions, both within Australia and offshore, provided valuable opportunities for those that were well-positioned in the industry.
“When the entire market was booming like it was from 2004-2006, everyone looked like a star so these difficult times reduces the number of people in the fund management market and also reduces incentive for new players to start up,” Peters MacGregor Capital Management founder and chief investment officer Wayne Peters told InvestorDaily.
“The economies are going to be very subdued for an extended period of time so I don’t have any great expectations that the markets will be double of what we’re at now.
“This type of market very much plays to the stock picker fund manager as opposed to those types that tend to mirror their portfolio to the overall market.”
During strong bull markets the funds management sector sourced itself out but now poor markets had caused a lot of smaller funds to close down during the last few months, Peters said.
“It’s very difficult to pick the talent when everyone’s boats are rising just because the overall tide is rising,” he said.
“It’s more difficult to stand out in that market but in a down market, that’s when you see the true stock pickers.”
There was a very strong “survivorship bias” in the funds management industry, Peters said.
“You tend to hear about the ones that are successful but no one focuses on the hundreds or so that are going out of business all the time,” he said.
“Even larger operators are under the pressure at the moment, that’s just pretty much par for the course and that’s what we’re seeing now.”
Fund managers could use the time to strengthen brand awareness, grow value to the business and make discrepancies in competitor performances more noticeable, Peters said.
The Peters MacGregor Global Fund had been running since September 2004 and was experiencing inflows, amid the continued downmarket.
It planned to pump up its marketing strategies to the financial planning networks and would also focus on directly communicating to self-managed superannuation fund trustees, in order to build brand awareness.
“We’re reasonably well-positioned to take advantage of that,” he said.
