High flying investment manager Perpetual has had its Australian equities fund downgraded by research house Morningstar.
Perpetual, which has over $20 billion in funds under management, has seen its fund dropped from a highly recommended to a recommended.
"Perpetual has a long-term track record in Australian equities to make most of its rivals green with envy. While most of the elements which helped shape this track record are still in place, there are some issues confronting this behemoth of the asset class," said Morningstar research analyst Tim Murphy.
Morningstar cited aspects of Perpetual's foray into international equities and a lack of flexibility, due the size of funds under management, as reasons for the new rating.
"The move into international stocks, a concept we like, is new territory for this team, and the execution to date has left something to be desired," Murphy said.
"The house now manages more than $20 billion in Australian equities, and we believe there is evidence that this size is hampering the team's flexibility to act on some analyst calls.
"The fact that Perpetual was a value manager, a style that underperformed in the last couple of years, did not reflect on the overall positive strength of the fund."
