Morningstar’s GDG analysis foresees slower MA growth

Mike Taylor

Managing Editor and Publisher

23 April 2026

Research and ratings house, Morningstar has noted the divergence between the positives in Generation Development Group’s (GDG’s) Wednesday March quarter update to the Australian Securities Exchange (ASX) and a 22% intraday decline in its share price.

It said the share price reflects resulting falling short of expectations rather than poor fundamentals with managed accounts being the clear laggard with funds under management (FUM) growth slower than anticipated, disappointing investors who had priced in more aggressive growth.

“Managed accounts is still gaining market share, but at a slower pace than expected. Prior aggressive growth targets look increasingly unachievable. Near-term headwinds include market volatility; longer-term, competition and slower addressable market expansion are likely factors as well,” the Morningstar analysis said.

It said “investment bond growth exceeded our forecast. Legislative tailwinds make large super balances and direct investing less tax-attractive, boosting the appeal of Generation’s tax-managed bonds as an alternative option. But stronger future competition is likely”.

Morningstar said it was reducing its fair value estimate for Generation to $3.70 per share from $4.80, driven by cuts to managed account growth forecasts, further fee compression in investment bonds and a rise in the cost of capital to 10% from 9%.

The research house said it saw the managed account market growing more slowly than previously expected due to higher interest rates, tighter regulation and demographic headwinds from an aging population.

Morningstar said that despite its fair value reduction it still saw cross-selling potential across the GDG group to drive earnings growth.

“The research business, Lonsec’s, growing coverage and expanding advisor subscriber base allows it to package model portfolios distributed through Evidentia, Generation’s managed accounts platform.

“Evidentia remains the market leader by volume and service capabilities, benefiting from priority distribution partnerships and product shelf inclusions. Competitors will try to catch up, though we expect Evidentia to maintain its lead as it continues to bolster its offering and expand distribution,” it said.