Platinum, a prominent asset management firm, is currently facing concerns regarding potential outflows following the departure of its co-chief investment officers (co-CIOs), Andrew Clifford and Clay Smolinski. The exit of these key figures has raised apprehensions about redemptions risks, especially considering their significant roles and established reputations within the company.

The announcement of Clifford and Smolinski stepping down from their positions on February 25 has prompted Morningstar to revise its outflows forecast for Platinum, foreseeing a decline in funds under management (FUM) from $13 billion to $3 billion by the fiscal year 2029. This projection is driven by expected outflows averaging 33% of FUM annually, an increase from the earlier forecast of 20.1%.

In response to this leadership change, Ted Alexander, a former chief investment officer at BML Funds, will assume the portfolio management responsibilities for the Platinum International Fund. However, Morningstar has pointed out that Alexander lacks the same level of name recognition as Clifford and Smolinski. The research house emphasized that investor confidence in Platinum had largely been influenced by the departing co-CIOs.

Morningstar’s equity analyst Shaun Ler expressed concerns about potential outflows following the departures, noting that while there is a successor in place, the stability of the team and the risks of redemptions have heightened. Ler highlighted that many domestic retail investors, who constitute a significant portion of Platinum’s FUM, had likely maintained their investments based on trust in Clifford and Smolinski. The familiarity and long-standing presence of the departing co-CIOs among retail investors could further contribute to uncertainties surrounding their exits.

The challenge now lies in Alexander’s ability to establish a similar level of trust and confidence among investors in the medium term. Despite Alexander’s respectable track record from previous roles at various firms, including BML, Orca, Magellan, and Neptune, Morningstar believes it will take time for him to match the influence and recognition enjoyed by Clifford and Smolinski.

Platinum’s CEO, Jeff Peters, has indicated that the firm is actively engaging with research houses to clarify and address any concerns regarding the recent changes within the organization. The impact of these departures on Platinum’s overall performance and investor sentiment remains a focal point of interest within the financial industry, with market observers closely monitoring the developments at the asset management firm.