The days when Australia “rode on the sheep’s back” may be long gone, but agriculture remains a critical component of the economy, generating valuable export income. While overseas investors understand its importance, for most local institutions it’s still a bridge too far.
For several years, investors, from institutional to retail, couldn’t get enough of the tech stocks with all their promises of future growth. But now the market has spoken and it’s saying precisely this – valuations matter again.
Link Group upbeat despite Woodford distraction
While presenting a generally upbeat outlook for its continued expansion globally, Link Group addressed brokers and investors in London last week on the issue of its regulatory issue regarding the failure of one of its glamour clients, the Woodford Global Equity Income Fund.
In his presentation, John McMurtrie, the global chief executive, said that Link Fund Services (LFS) considered that at all times it had acted in accordance with applicable rules and in the best interests of all investors of the fund, and would continue to do so.
In the presentation available on the ASX website, he says: “The Financial Conduct Authority has notified LFS that it is commencing an investigation into LFS relating to the Fund. LFS will continue to co-operate fully with the FCA throughout this process and will answer any questions the FCA has regarding the fund. This is a confidential process and we cannot speculate or make any further comment regarding the FCA investigation.”
Plenty of others in London are happy to speculate and comment though, given the fund’s high-flying former portfolio manager and colourful history, which LFS inherited when it acquired the Capita Asset Services group of the UK and Europe in 2017. Capita was the long-time administrator of Woodford funds.
Neil Woodford, founder and principal, was arguably the most celebrated stockpicker in the UK until a couple of years ago when his performance started to tank. Morningstar downgraded his flagship fund in May and investors started to head for the exit. The issue for Link and its predecessor is whether they exercised sufficient oversight in the whole process.
Elsewhere, Link seems to be travelling very well. McMurtrie says the increasingly global company is realistic about short-term headwinds but optimistic on medium-to-long-term opportunities. Its earnings guidance from last month is reaffirmed, it recently renewed its important contract with AustralianSuper, continues to negotiate with REST for renewal (while rolling over the work on a monthly basis), has reaffirmed its projected integration efficiency targets due to Capita, and is leveraging Link capabilities throughout Europe.
Apart from the Woodford commotion, on the downside, Brexit uncertainties have impacted sentiment and operating performance in Europe, Link says. And the share price on the ASX hasn’t helped morale. It has fallen from $7.76 on May 30 to $5.41 on June 21.
– G.B.
