Major Australian investment funds, including those run by Regal Partners and Wilson Asset Management, are nursing double-digit losses after a bruising October. This challenging period of underperformance for active managers also impacted funds from GQG Partners and Pengana Capital. The declines stem from growing concerns about financing the artificial intelligence boom, coupled with persistent inflation, rising interest rates, and a housing downturn severely impacting small-cap stocks. GQG Partners, an ASX-listed global asset manager, provides investment management services focused on equity strategies worldwide. The firm disclosed significant investor redemptions totalling $US6.7 billion ($9.8 billion) in October, bringing its year-to-date outflows to $US32.9 billion.
GQG’s flagship Global Equity Fund tumbled 10.1 per cent in October following a sharp sell-off in the US technology sector, occurring after Chief Investment Officer Rajiv Jain’s recent pivot into tech stocks. This led to GQG’s funds under management plunging from $US149.2 billion to $US131.6 billion. Regal Partners, a prominent investment firm, reported even steeper declines. Its Atlantic Absolute Return Fund plummeted 35.7 per cent last month, while its Australian-focused long-short portfolio dropped 10.4 per cent in October. Regal attributed its underperformance to an outsized exposure to the smaller end of the local sharemarket and the resources sector, affecting key positions.
Despite these setbacks, Regal investment director Charlie Aitken suggested the brutal sell-off presents a rare buying opportunity, particularly in small-cap resources stocks, anticipating peaked interest rates. Wilson Asset Management’s WAM Active vehicle also declined significantly, tumbling 22 per cent in October, impacted by volatility across smaller companies and AI-exposed sectors. Pengana Capital’s High Conviction Fund plunged 25.1 per cent for the month, with its portfolio manager James McDonald attributing this sharp reversal to higher interest rates and increased short interest in small caps.
