GQG Partners, an investment manager based in Fort Lauderdale, recently faced significant investor withdrawals despite a strong turnaround in its first-quarter performance. The firm manages investment funds for clients, primarily focusing on equities. Investors pulled a substantial A$12.2 billion from GQG’s various funds during the March quarter, according to figures released on Monday. This occurred even as investment chief Rajiv Jain’s contrarian decision last year to divest from technology stocks in favour of traditional “old-world” industries began to yield positive results. Shares in GQG fell 1.3 per cent in early trading, and its funds under management dipped from US$172.9 billion to US$162.5 billion in March.
Mr. Jain, a vocal critic of the artificial intelligence stock surge, had described the long-running trade as “dotcom on steroids.” His strategy to avoid the sector contributed to all four of GQG’s funds underperforming their benchmarks throughout 2023, prompting US$3.9 billion in outflows last year. However, GQG’s rotation into defensive companies with durable earnings and strong fundamentals saw all four funds outperform their benchmarks during the first three months of this year. Notably, preliminary calculations indicate the Global Equity Fund returned approximately 5 per cent for the quarter, significantly outperforming its benchmark, which tumbled 3.2 per cent. This positive performance was fuelled by a strong February, with top holdings including Coca-Cola and Johnson & Johnson.
Despite this reversal in fortunes, the exodus of client capital persisted across all of GQG’s strategies in the March quarter. The emerging markets fund saw net outflows of US$3 billion, the international fund US$2 billion, the global fund US$1.9 billion, and the US fund US$1.7 billion. Morningstar analyst Shaun Ler highlighted that GQG’s longer-term performance against its benchmark remains modest compared to other active managers. Ler believes a “very solid multi-year track record” is crucial to halt the ongoing redemptions, warning that prolonged underperformance could lead to client loyalty eroding and an increasing reliance on market returns over net inflows for funds under management growth.
