The BT Investment Management Ltd (ASX: BTT) share price has fallen lower in morning trade after the fund manager released its interim report.
At the time of writing its shares are down 3.5% to $12.54.
Key takeaways from the result include:
- Total half-year revenue and other income fell 12.4% to $246.3 million.
- Net profit after tax increased 0.9% to $78.9 million.
- Average funds under management (FUM) up 10.1% to $86.3 billion.
- Diluted earnings per share flat at 30 cents.
- Interim dividend of 19 cents per share (30% franked).
What happened?
The major driver of BTIM's poor top line result was its Performance Fees revenue. While Investment Management Fees revenue rose 7.6% to $211.6 million, Performance Fees revenue tumbled a massive 62.6% to $27.9 million.
Thankfully a sharp reduction in operating expenses managed to offset this decline in revenue. Operating expenses fell 20% from the prior corresponding period to $134.5 million, largely as a result of a drop in employee expenses due to lower performance fees.
Pleasingly though for the fund manager it is still experiencing strong fund in-flows. Average FUMs increased 10.1% to $86.3 billion during the half, and finished the half up 18% to $91.2 billion.
But with 15 of its 31 funds underperforming their respective benchmarks before fees in the last 12 months, I believe there is a danger that BTIM could be at risk of fund outflows if things don't improve.
Should you invest?
Whilst I am a fan of the fund manager, I think 22x trailing earnings means its shares are a little on the expensive side.
Because of this I would suggest investors hold off an investment until they come down to a level more befitting its current growth profile. Investors might want to consider an investment in WAM Capital Limited (ASX: WAM) or Challenger Ltd (ASX: CGF) instead.
