Morningstar says that Generation Development Group’s growth in managed accounts has failed to meet investor expectations and was the cause of a drop in GDG’s share price following the release of March quarter results.
In an update posted to the ASX yesterday, GDG reported 35 per cent and 30 per cent annual funds under management (FUM) growth in its investment bond and managed account businesses respectively, as of the end of the March quarter. Research subscribers were up 12 per cent.
In an analyst report released on Thursday morning, Morningstar equity analyst Shaun Ler said a 22 per cent share price plunge on Wednesday reflected managed accounts growth falling short of expectations rather than poor fundamentals.
“Managed accounts was the clear laggard, with FUM growth slower than anticipated, disappointing investors who had priced in more aggressive growth,” Ler said.
“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.”
IMAP/Milliman’s latest census data shows aggregate managed accounts are nearing the $300 billion threshold with $292.9 billion in funds under management as of 31 December 2025.
However, he said investment bond growth from Generation Life exceeded forecasts, but that stronger competition in the future is likely.
“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,” Ler said.
Morningstar runs competing businesses with GDG – both have a managed accounts and fund research arm – but said in a statement that it maintains research integrity through documented research methodologies, peer review processes before the distribution of research reports, quality assurance controls and fair and consistent dissemination of research.
“Morningstar has an associated business Morningstar Investment Management Limited, which provides investment management and consulting services,” a Morningstar spokesperson told Professional Planner.
“Morningstar avoids potential conflicts of interest by not undertaking or publishing qualitative analyst research on Morningstar Investment Management’s investment products.”
Furthermore, research employees are required to comply with Morningstar’s research integrity policies.
“These arrangements are intended to help ensure that Morningstar’s research is done with integrity and that conflicts of interest do not adversely affect the quality of services provided to clients,” the spokesperson said.
GDG acquired Lonsec in June 2024 and Evidentia Group in February 2025.
Evidentia further acquired Encore Advisory last November to expand its consulting capabilities in for advice practice management.
GDG is split into three different verticals each with their own CEOs: Generation Life (led by Felipe Araujo), Lonsec Research and Ratings (Lorraine Robinson) and Evidentia Group (Michael Wright).
To manage its own conflicts, Lonsec Investment Solutions, the investment management division of the research business, was folded into Evidentia. Furthermore, the researcher stopped rating Gen Life products.
“Where there’s a clear [conflict], we just stop,” Wright told the Professional Planner Researcher Forum last December.
