BT, Henderson, Perpetual: Spotlight on fund managers

Last week investors received a plethora of insights into how a number of leading fund management companies are travelling.

BT Investment Management (ASX: BTT), which has a financial year-end of 30 September, released its full-year results last week. The Westpac (ASX: WBC)-aligned fund manager reported a solid 35% increase in fee revenue and a 49% increase in cash net profit after tax, which highlights the significant earnings leverage fund managers can enjoy to higher levels of funds under management (FUM). Over the year, FUM increased by 25% from $46.6 billion to $58.3 billion and dividends were boosted by 44% to 18 cents per share.

Henderson Group (ASX: HGG), a UK-based funds management firm that was demerged from AMP (ASX: AMP) a number of years ago, released its third-quarter results last week. Over the quarter to the end of September assets under management increased by 4.3% to £70.8 billion and for the first time since the first-quarter of 2011 Henderson experienced net inflows into its equity funds.

Perpetual (ASX: PPT) held its Annual General Meeting last week during which the high profile fund manager updated the market on its outlook for FY 2014. Guidance included cost saving related to the ‘Transformation 2015’ strategy. As of FY 2013, Perpetual had spent approximately $50 million to deliver around $37 million in annualised savings.

Management said it expected to spend a further $20 million during FY 2014 and deliver a further $13 million in annualised savings. For the first half of FY 2014, the company guided the market expectations towards an underlying profit after tax in the range of $45 million to $50 million. In comparison, the underlying result in the previous corresponding period was $35.1 million.

Foolish takeaway

The positive market sentiment and rising equity markets are a positive for the financial services sector in general and suggest a positive outlook for fund managers; however given the significant share price appreciation of these three firms, it may be too late for investors to jump aboard these big names.

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Motley Fool contributor Tim McArthur owns shares in BT Investment Management, Henderson Group and Perpetual Ltd.

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