MENU

This entire sector looks pricey

Forget the recent run up – and corresponding fall – in bank shares. Some of the biggest success stories among ASX shares over the last 12 months have been those of asset managers and investment service companies.

Credit is in large part due to low term deposit rates favouring fund inflows, the overall market rise, and a bounce off lingering GFC lows.

Consider Magellan Financial Group (ASX: MFG), with its shares climbing over 330% versus a 16% return in the S&P/ASX 200 index (Index: ^AXJO) (ASX: XJO) over the same period.

The company has seen massive expansion in funds under management. In the most recent half-year report, Magellan saw revenue jump 112% — management fee revenue alone rose to $25 million from $14 million in the first half of 2011. Today, as funds under management keep growing, Magellan shares are trading for about 65 times trailing earnings.

In a similar trend, Perpetual Limited (ASX: PPT) shares are up 61% in the last 12 months and shares now trade for 61 times earnings. Platinum Asset Management (ASX: PTM) shares, despite the underperformance of some of the company’s fund products, have climbed nearly 37% and are now trading for over 25 times earnings.

Look for better values? Two of Australia’s most promising small companies are still flying under the radar. Discover these two exciting ASX investments in our brand-new special FREE report, “2 Small Cap Superstars”. Click here now, it’s free!

More reading

Motley Fool contributor Catherine Baab-Muguira owns no shares in any company mentioned in this article.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.