Professional fund management companies can have rather attractive returns in their own right as stocks, so if you want to keep control of what stocks you buy and take advantage of the great returns these companies may offer, they could be valuable additions to your portfolio.
IOOF Holdings Limited (ASX: IFL), the financial products provider and portfolio administrator, raised its funds under management, advice and supervision (FUMAS) to $124 billion, up 6% from the pcp. Its statutory profit for the half-year ending December 2013 climbed by 45% to $48.2 million. All of its business segments rose for the half year.
Superannuation plays a big part in its revenue and earnings, so the government’s plans to revise the financial services regulations can be a benefit for the company.
Its five-year total shareholder return is an average annual 34.1% and its dividend is 4.57%.
Magellan Financial Group Ltd (ASX: MFG), an international equities fund manager, rose from a low of about $10 a share to $13.43 since mid-December, setting a new all-time high along the way.
Over the past three years, its underlying NPAT increased incredibly, and the 33 PE shows the market is expecting growth to come. Whether it can repeat that same run is difficult to say, but its half-year results had underlying net profit more than doubling to $36 million compared to the pcp.
Investors interested in this one may want to observe this stock for a while, because it has rallied so strongly and may settle down before resuming its climb.
Like the old phrase, “if you can’t beat them, join them”, with successful fund management companies investors can gain along with the professional fund managers. You can also still be active in the decision making of how to manage your own portfolio.