Morningstar’s underwhelming assessment of L1 Group

Mike Taylor

Managing Editor and Publisher

16 April 2026

L1 Group has been issued a mixed report card by research and ratings house Morningstar in the wake of the merger of L1 Capital and Platinum.

In an analyst note issued this week, Morningstar equity analyst, Shaun Ler noted thathe group’s funds under management (FUM) stood at $17 billion as at March, down 4% from the December quarter but flat on the September,

The analysis said that while FUM was higher than expected, driven by slower outflows from Platinum, Morningstar did not believe the combined Platinum-L1 Capital entity’s competitive position would materially improve against passive products or higher-performing active managers.

In doing so it noted that:

• L1 Group has consolidated Platinum International strategies into L1’s stronger-performing International strategy, which should support retention and improve flows. However, around 20% of FUM remains in weaker- performing Platinum funds and, to our understanding, is not slated for consolidation.
• L1 Capital funds carry high fees, and we doubt the firm can consistently outperform its benchmarks and peers. Performance is highly volatile, and we do not expect the current strong track record to sustain in the long term. This limits the extent to which FUM and earnings can improve.

The Morningstar analysis said the bottom line was that despite the ratings house raising its FUM forecasts to reflect lower outflows, it was reducing its fair value estimate for L1 by 6% to $0.75 per share noting that this reflected a more challenging industry backdrop.

The analysis referenced the risk in the Group’s “outsized exposure to listed equities”.

“Equity managers face intense competition from passive vehicles that offer comparable factor exposures at lower cost. The proliferation of ETFs and model portfolio alternatives compounds this substitution risk,” it said.

The Morningstar analysis concluded on the note that once early integration gains come to pass, the ratings house thinks L1 Group looks more like a slower-growing active manager facing rising competition from cheaper passive options and a crowded active peer set, with only limited scope to achieve above-peer EPS growth.