The Perpetual Limited (ASX: PPT) share price is down 3% to $31.28 today and down around 40% over the past year after the group revealed funds under management (FUM) fell $2.5 billion to $27.7 billion for the quarter ending December 31 2018 compared to the prior quarter ending September 30 2018.
Market depreciation took around $2.5 billion of the FUM, but the equities manager also experienced $400 million in outflows offset by a $100 million raising for Perpetual's listed investment company the Perpetual Equity Investment Company. Distribution payments of $100 million to clients also took the shine off the FUM.
Over the past 5 years Perpetual stock is now down around 33% and it's actually at the same level today as it was on January 16 2009 at $31.60.
In other words it has delivered no growth in 10 years which is embarrassing enough with the kicker being that January 2009 was the middle of the GFC that eviscerated global equity markets and set record lows for share prices across the board.
In other words the Perpetual share price has gone nowhere in 10 years despite a near 10-year record equity bull market supporting fund managers since the bottom of the GFC in March 2009.
Admittedly, Perpetual is an Australian equity focused business, but equity markets at home have also been robust supported by generally strong commodity prices alongside strong house and big bank share prices.
Over the past 10 years Perpetual has also failed to more aggressively build an international equities business, which should not be an especially complicated endeavour for an experienced or competent management team.
If Perpetual's executives needed help they could have looked up the road in Sydney's CBD to Magellan Financial Group Ltd (ASX: MFG) that has gone from virtually nothing in FUM to $72 billion in the same period.
While Perpetual's international equities business now consists of just a few minor funds with the largest running just $266 million in FUM. It has also underperformed its global equities index by 2.65% over the past year and is only 0.66% ahead over 5 years.
Perpetual has also had the tailwind of Australia's ever-growing superannuation pool supporting its equities business and other financial planning and trustee services businesses since the GFC. This puts the effort of growing total FUM from $23.6 billion (on 31 Jan 2009 towards the bottom of the GFC) to just $27.7 billion today in even worse context.
Furthermore, one of the factors helping the share price and performance to at least tread water over the past 10 years is the fact that former CEO Geoff Lloyd pulled masses of cost out of the business between 2012 and 2015, but failed to deliver anything in the way of a sustainable growth strategy.
The atrocious shareholder returns show that Perpetual might be an ok place to collect a pay check from every month for staff, but it's a million miles from being an investment grade business.
