Morningstar says Perpetual’s corporate trust division is becoming the group’s clearest growth driver, with funds under administration reaching a record A$1.4 trillion while asset management suffers heavy redemptions.
Morningstar says Perpetual’s corporate trust division is emerging as the business’s clearest growth driver, even as the wider asset management arm continues to lose money from redemptions and weak performance. In analysis released after Perpetual’s latest market update, Morningstar equity analyst Shaun Ler said the group’s first-quarter result showed “a tale of two ends” as shrinking funds management sat alongside a corporate trust franchise that appears more durable and better placed to expand its share of group earnings.
According to Perpetual’s update to the Australian Securities Exchange, funds under management in the asset management division fell 6% to A$21 billion in the first quarter, hit by net outflows of A$10 billion. By contrast, corporate trust funds under administration rose 3% to A$1.4 trillion, a record level for the division and one that underlines the scale of the business outside traditional investment management.
Ler said the outflows from funds management were slightly worse than expected and appeared to be stubborn, particularly from offshore boutique strategies that he said lacked convincing recent performance. He added that gains in a few strategies were being overwhelmed by redemptions elsewhere, while newer products such as exchange-traded funds were unlikely to materially alter the picture. Morningstar’s view is that corporate trust is growing from a broad client base, with the firm slowly increasing the amount of business it handles for existing customers and using digital products to make switching more difficult.
That resilience in corporate trust has become more visible in Perpetual’s recent trading updates. Grafa and RTTNews both reported that the division’s latest rise was supported by new clients, including a global bank, along with stronger transaction volumes and higher issuance activity. RTTNews also said the division’s funds under administration included A$300 billion in custody assets. At the same time, Perpetual’s wealth management unit remained flat at A$22.1 billion in funds under advice, while the company continues to progress the sale of that business to Bain Capital, with completion expected later in 2026.
Morningstar kept its fair value estimate for Perpetual at A$19.50 a share and said it still regards the stock as undervalued. The research house also expects asset management earnings to keep slipping relative to corporate trust, and said only 47% of strategies beat their benchmarks over three years before fees in the September quarter, a signal it sees as consistent with further outflows. In Morningstar’s longer-term forecast, corporate trust could rise to 45% of pre-tax profits from 28% in fiscal 2026, reinforcing the view that the division may increasingly define the group’s earnings mix.
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