Touchstone Asset Management, a boutique firm backed by Bennelong Funds Management, is closing its doors after struggling to maintain scale. This decision comes shortly after Touchstone announced the closure of its flagship fund last month, while intending to continue managing approximately $1 billion in Australian equities for institutional clients. Touchstone, founded in August 2015 by Jack Chemello, Suellen Morgan, and Mary Feros, managed $3.5 billion at its peak. Touchstone is an Australian equities fund manager, known for its ‘benchmark unaware’ approach, constructing portfolios without mirroring the S&P/ASX 200 Index weightings, believing it was too heavily focused on banks and big miners.
Bennelong chief executive John Burke stated that the decision to close Touchstone was mutual, reached after extensive discussions between the board and investment team. Factors contributing to the closure included major superannuation funds in-housing investment teams and generally weaker conditions in equity markets. Documents circulated to investors in April showed that the Touchstone Index Unaware Fund had returned 8.76 per cent per annum since inception, underperforming its benchmark by 0.94 per cent. The fund also underperformed the S&P/ASX 300 Accumulation Index over one, three, and five-year periods.
Touchstone’s closure follows similar moves by other firms. Celeste Funds Management, a small-cap boutique, decided to close after 27 years in May. Ethical Partners, co-founded by Nathan Parkin, closed last year, returning $2 billion to investors, while Sydney quant fund Redpoint Investment Management shut down in late 2022, returning around $3 billion.
Touchstone’s largest holdings at the time included Fisher & Paykel Healthcare, National Australia Bank, QBE Insurance, Rio Tinto, and Telstra. The fund maintained an underweight position in Commonwealth Bank, a strategy shared by many of its peers. The closure marks another instance of firms struggling amidst evolving market dynamics and shifting investor preferences.
