Morningstar turns negative on this global ETF
Our conviction drops as the ETF provider battles outflows amid leadership changes and strategy overhaul.
Mentioned: Platinum International ETF (PIXX)
Morningstar has reduced our rating on Platinum International ETF (ASX: PIXX) and Platinum International funds.
Platinum Asset Management has faced significant challenges over the past five years, grappling with persistent outflows, leading to a 60% decline in assets between December 2019 and December 2024. The departure of co-founder Kerr Neilson and the underperformance of its flagship funds, Platinum International and Platinum Global (Long Only), relative to the broader equity market, have contributed to this downturn.
A major restructuring effort began in March 2024, aimed at aligning costs with reduced revenues. At the investment team level, this resulted in downsizing, with four analysts and three portfolio managers departing. Additionally, the firm abandoned its previous multi-portfolio-manager discrete sleeve model in favor of a more traditional co-portfolio management structure, with Andrew Clifford and Clay Smolinski taking the helm. While we saw the shift as bringing some benefits—particularly for Clifford, who stepped away from his role managing Platinum Asia—we had concerns about the impact of structural and cost-cutting changes but were reassured by indications that Clifford intended to stay for another five years.
However, less than a year later, both Clifford and Smolinski stepped down, prompting Platinum to appoint Ted Alexander as sole portfolio manager for its global equities strategies. Alexander brings extensive experience in managing equities and other asset classes across Australia and the UK, though never at Platinum’s scale. His arrival introduces uncertainty as the firm navigates the aftermath of prior headcount reductions.
Further changes to the investment process may be on the horizon, with indications that Alexander could pursue a more concentrated portfolio and reassess the value framework—a shift that could affect Platinum’s hallmark contrarian investment approach.
These changes have led to a more cautious outlook on Platinum’s overall business, investment team, and process, raising doubts about its ability to consistently outperform the market.
Platinum’s contrarian strategy is facing shifts
Platinum’s investment process is inherently complex. Analysts and portfolio managers are expected to develop strong convictions on market trends, emerging themes, industries, countries, and currencies—all while managing short positions and determining appropriate market exposure at any given time.
The firm’s long-term value-focused approach centers on identifying underappreciated companies positioned to benefit from identified trends or themes. Platinum’s analysts operate within global sector-based teams, each tasked with generating investment ideas through detailed reports. While analysts have some flexibility in determining key metrics, they must ultimately convince portfolio managers of an investment’s merits.
One ongoing challenge has been the sizing of these contrarian bets. The portfolio’s underweight US position and overweight exposure to China have negatively influenced strategy outcomes for several years.
The arrival of Alexander signals adjustments to this process. He has expressed a desire to standardize analysts’ reports, limiting their discretion. He has also suggested reducing the number of stocks within the strategy—an approach that introduces additional risk, given that the portfolio already deviates from traditional market dynamics. His views on a more growth-at-a-reasonable-price-driven investing approach suggest further adjustments might come.
The impact of these modifications raises concerns that we have expressed in resetting the Process rating to Average. We will be closely monitoring developments and assessing how the implemented adjustments affect the overall strategy, reviewing our conviction accordingly in the future.
Platinum International takes a distinct, benchmark-agnostic approach to investing, resulting in a portfolio that can differ significantly from the broader market. Its value-focused approach prioritizes undervalued sectors that have fallen out of favor, often requiring patience from investors. Given its contrarian nature, the portfolio’s performance can deviate from market trends, sometimes leading to prolonged periods of underperformance before delivering returns.
To counterbalance the risks associated with these contrarian bets, the portfolio is diversified across approximately 50 individual stocks. Currency positions are actively managed to mitigate volatility, while short-selling—typically constituting 10%-20% of the portfolio—introduces additional risk relative to benchmarks. Cash holdings are also tactically adjusted, averaging around 13% of net asset value over the past five years.
For years, Platinum has favored investments in Asia, particularly China, over US equities. As of January 2025, its US exposure stood at just 22%, a significant underweighting compared with the index’s 73%, with many short positions tied to this region (5%). Its allocation to Asia reached 37%, with Chinese equities accounting for nearly 23% versus 0% in the MSCI World ex-Australia Index Morningstar Category benchmark, reflecting the firm’s conviction that these markets offer superior value.
Currency exposures are managed in alignment with these regional biases. At the sector level, as of January 2025, Platinum’s highest weightings were in financial services and industrials while continuing its long-standing underweight position in technology.
Platinum’s leadership shakeup sparks uncertainty
Platinum Asset Management faces a pivotal shift with the appointment of a new and sole portfolio manager, a change that has led to a reassessment of the team’s stability.
Previously, portfolio management duties were distributed across multiple senior figures: Andrew Clifford and Clay Smolinski each oversaw 42% of assets, while smaller allocations were managed by Nik Dvornak (10%), Bianca Ogden (2%), and other senior analysts (5%). However, in February 2024, Clifford and Smolinski took on co-portfolio manager responsibilities under CEO Jeff Peters’ reset plan, following years of outflows stemming from co-founder Kerr Neilson’s departure in 2019.
In March 2025, Platinum appointed Ted Alexander as sole portfolio manager for its global equity strategies, overseeing approximately AUD 5 billion in assets. The same day marked a major leadership transition: Clifford, Platinum’s co-founder and co-CIO, stepped back from his duties, while co-CIO Smolinski took a six-month leave, with indications he will not return as portfolio manager and may not return at all.
Alexander’s arrival raises concerns. Morningstar has yet to rate a strategy under his leadership, and his previous tenures at multiple firms involved managing significantly smaller asset pools. His unexpected appointment could disrupt the analyst team, exacerbating existing turnover. Compounding matters, Alexander introduced his own analyst to cover Asia despite the firm already employing dedicated specialists for the region.
Efforts to mitigate the risks associated with Alexander’s leadership include the creation of an investment oversight group, which replaces the CIO function. However, this newly formed entity must still prove its ability to effectively challenge and support investment decisions.
The broader restructuring process in March 2024 also led to a reduction in Platinum’s analyst team, with four analysts and three portfolio managers departing. Given these changes, the new portfolio manager, and concerns about team cohesion, we take a prudent view and assign an Average People rating to the team.
Platinum’s turnaround plan faces uncertainty
Platinum Asset Management has remained in transition since the launch of CEO Jeff Peters’ three-year plan," Stabilize, Reset, Grow," in March 2024. While Platinum claims progress is ahead of schedule, ongoing risks justify a Below Average Parent rating as challenges persist.
Platinum’s flagship global equity funds have continued to face performance struggles, leading to a 60% decline in assets between December 2019 and December 2024.
A pivotal shift occurred in March 2025 with the appointment of Ted Alexander as sole portfolio manager, replacing longtime co-portfolio managers Andrew Clifford and Clay Smolinski. However, Alexander’s history of short-lived tenures (ranging from one to three years) and experience with smaller asset pools raise concerns over his ability to manage Platinum’s $5 billion portfolio effectively.
To align expenses with lower revenue, Platinum cut costs by 18% from the second half of 2023 to the second half of 2024. Workforce downsizing played a major role, with 45 employees departing to shrink staff numbers from 140 to 95. Additional savings were achieved by closing UCITS and Cayman funds and shutting down Platinum’s London office. However, these one-time measures could limit future cost-cutting opportunities, making Platinum’s 25% expense reduction target increasingly difficult to achieve.
On the positive side, Platinum has adjusted its remuneration framework to better align performance incentives, while listed investment companies are set to merge in 2025 to address valuation issues. Under general manager Phil Stockwell, a new distribution and partnership model is being explored, with $50 million in balance-sheet capital freed to seed Australian funds from overseas managers.
Despite ongoing restructuring, Platinum continues to suffer substantial outflows, reducing revenue by an estimated $3.6 million per month. Whether Alexander’s leadership can halt years of underperformance remains uncertain. Also uncertain is the business’ ability to diversify the revenue away from the falling flagship, reinforcing a cautious outlook.
