Regal now blind and unfashionable
Phil King's clients are enduring one of their worst ever stints, but Rampart reckons you'd be mad to death-ride him.
Clients of Regal Funds Management are digesting the carnage across its latest performance numbers, released on Wednesday. In the three months to March 31, Regal's global absolute return fund was down 40 per cent; its global tactical opportunities fund was down 22 per cent; its Australian small companies fund was down 19 per cent; its global market neutral fund was down 18 per cent; and its Australian long-short fund was down 11 per cent. Bear in mind, this performance was before the sell-off triggered by Liberation Day. As of April 15, the small companies fund is now down 26 per cent in calendar 2025.[[Having said that, as of April 16, the ASX small ordinaries index is virtually back where it was pre-Liberation Day, so the Regal small companies fund is wildly underperforming that benchmark.]]
The biggest driver of this March quarter wipe-out was Regal's incredibly reckless gamble on speculative biotech Opthea, in which Regal vaporised $300 million in March[[In lucky timing, Regal CEO Brendan O'Connor sold 10 per cent of his Regal shares (raising $3.4 million at an average price of $2.83 per share) the week before Opthea's devastating trial results sent Regal's share price down 15 per cent to $2.41.]] – as I wrote at the time. Even good investors make mistakes, but the lack of risk controls around this position is truly baffling.
Joe Aston
Clients of multiple Regal funds are shocked to discover that Opthea was an uncontained bet – an outsized holding across virtually every equity fund in the Regal stable. Those investors were entitled to presume that different equities strategies with very different names were designed to produce uncorrelated returns, when in fact they were highly correlated.