Barramundi’s portfolio suffered its worst reported year in decades, with a NZ$42.9 million loss and an adjusted NAV return of -18.2% against a 9.2% benchmark gain. The board is negotiating a new management agreement with Fisher Funds while imposing tighter diversification and risk limits.
- NZ$42.9m FY2026 net loss and -16.2% total shareholder return
- Adjusted NAV return of -18.2% versus a +9.2% benchmark return
- New portfolio guardrails include at least 25 stocks and a 5% maximum position
- Management agreement negotiations remain unresolved after its renewal date
- FY2027 September-quarter gross return of 3.0% beat the benchmark’s 1.3%
NZ$42.9m loss exposes the scale of Barramundi’s underperformance
Barramundi Limited (NZX:BRM) is responding to its sharpest investment setback with a tighter portfolio rulebook and a renegotiation of its long-standing management agreement. The listed investment company reported a NZ$42.9 million net loss for the year ended 30 June 2026, while its total shareholder return fell 16.2%.
The damage was most stark against the benchmark. Barramundi’s adjusted NAV return was negative 18.2% for the year, compared with a positive 9.2% return from the S&P/ASX 200 Index hedged 70% into New Zealand dollars. Gross portfolio performance fell 17.0%. The company said its portfolio had underperformed the benchmark over the one-, three- and five-year periods.
Board opens management agreement negotiations
Chair Fiona Oliver described the result as disappointing in both absolute and relative terms. The board has been discussing a new agreement with the Manager, Fisher Funds Management, after taking independent advice on peer performance and market-standard terms.
The negotiations cover fees, the length of any replacement agreement, performance expectations, performance-related termination rights, risk management and reporting. No new agreement has been concluded, and the existing agreement continues on its current terms while discussions proceed. The review was already in focus in the company’s management agreement review, which reported the unresolved renewal process alongside the FY2026 result.
New limits target concentration and tracking risk
Even without a replacement management agreement, Barramundi said new risk controls took effect from the annual meeting. The portfolio must hold at least 25 stocks, limit any single holding to 5%, and keep industry exposure no more than 10 percentage points above the ASX 200 weighting.
The framework also introduces an ex-ante tracking-error range of 0% to 8%, with an expectation of 6% over a full investment cycle. The board will determine the currency-hedging strategy, replacing the previous manager-controlled approach, and the Manager will provide expanded reporting against the new guardrails. Robbie Urquhart attributed much of the FY2026 weakness to fears that artificial intelligence could disrupt several portfolio companies and reduce their earnings growth prospects.
Dividend support continues as NAV contracts
Shareholders received 5.25 New Zealand cents per share during the year, equivalent to an 8.2% dividend return on the company’s methodology. But the distribution exceeded the year’s earnings contribution: shareholders’ funds fell from NZ$241 million to NZ$186 million, reflecting the NZ$43 million net portfolio loss, NZ$18 million of dividends paid and NZ$6 million of dividends reinvested.
The board acknowledged that regular distributions have not been matched by net earnings, leaving retained earnings negative. It said improving performance remains the priority. Barramundi also bought back 2.6 million shares in the September quarter and a further 1.0 million in October, after no buybacks in FY2026 because the shares did not trade at more than a 6% discount to fair-value adjusted NAV.
Early FY2027 rebound offers limited evidence of recovery
The first quarter brought a more encouraging, though still preliminary, result. Barramundi reported a NZ$4.5 million net profit for the three months to 30 September, with gross portfolio performance of 3.0% against a 1.3% benchmark return. The result extends the company’s September-quarter rebound, although the share price remained at NZ$0.44 at quarter-end and stood 17% below NAV.
That early improvement does not yet resolve the central issue exposed by FY2026: whether the portfolio can deliver sustained benchmark-relative performance under the revised risk framework. The next management agreement, and the reporting that accompanies it, should make clear how much accountability the board can secure from the Manager if the recovery falters.
Bottom Line?
The September-quarter rebound is a useful start, but the investment case now turns on sustained benchmark performance and the terms of the replacement management agreement.
Questions in the middle?
- Will Barramundi and Fisher Funds agree on fees, performance obligations and termination rights?
- Can the new concentration and tracking-error limits reduce downside without constraining stock selection?
- Will the early FY2027 recovery persist while dividends continue to exceed recent net earnings?