One fund manager beats private credit slump

Only one listed fund manager in Australia has posted a positive share price return this year, as the broader sector struggles with economic pressures and regulatory scrutiny.

Pengana leads while private credit lags

Pengana Capital Group is the sole major fund manager to report gains since 1 January, with its share price rising 8%. The firm has reached $4 billion in assets under management and launched its AI-focused listed investment company AIX on the ASX.

Perpetual, the next best performer, is down 1.1%. It has been helped by multiple takeover bids from EQT and is in the process of selling its wealth management and corporate trust business to Bain Capital, due to complete this calendar year.

Private credit managers have fared badly, with HMC Capital down 28% and MA Financial Group down 48%. The two firms have fared slightly better over one year, with HMC Capital experiencing losses of 19.3% and MA Financial down 29%.

Related: Colchester pledges Australian ETF listing

Regulatory scrutiny and economic pressures weigh on private credit

Morningstar equity analyst Shaun Ler attributed the sector’s struggles to persistently high inflation, housing stress, and increased regulatory scrutiny. “Private credit has come under increased scrutiny amid a softer economic outlook. In Australia, persistent inflationary pressures and weaker housing markets have raised concerns, while private credit defaults in the US have intensified focus on the sector.

“During periods of economic uncertainty, investors tend to assess the resilience of smaller, economically sensitive borrowers, many of which rely on private credit funding. The key concern is whether deteriorating operating conditions could increase borrower stress, leading to higher impairments and pressure on asset quality and returns for private credit managers.”

GQG Partners has lost 23% since the start of the year, reporting US$15 billion in outflows during the first half. This was mostly concentrated in international and emerging markets, which saw US$4.7 billion and US$5.2 billion in withdrawals.

With two weeks until listed fund managers start reporting their financial results, the performance gap highlights the sector’s challenges.