Global funds management firm Treasury Group Limited (ASX: TRG) has seen its share price soar 8.4% today after investors responded positively to a 32.9% jump in profits.
Here are the highlights from Treasury’s full year result:
- Underlying net profit after tax up 32.9% to $18.7 million
- Full year dividend up 4% to 52 cents per share (cps); a fully franked final dividend of 28 cps (3.7% higher than the prior year) has been declared with the shares to trade ex-dividend on September 3 and pay day set for September 30
- Aggregate funds under management (FUM) as at date of merger down 2.3% to $49 billion
- Average net margin across the group’s portfolio of boutiques was 47 basis points
- Acquisition and integration of Northern Lights Capital Group performing well and to plan
- Group now has a broad based offering of investment strategies including US equities, Australian equities, international equities, emerging market equities, private equity and hedge funds
Fund managers in a sweet spot
While market volatility in the past few weeks may be unnerving some investors, it’s important to keep the business operations of fund managers in perspective. While equity market levels do play a role in the overall level of profitability for their operations, ultimately it is their overall level of FUM and investment performance that play a great role.
For companies such as Treasury Group, Platinum Asset Management Limited (ASX: PTM) and Contango Microcap Ltd (ASX: CTN), recent capital market conditions have been favourable for each of them to raise fresh capital and launch new funds which has led to inflows of new FUM.
The tailwind of superannuation and low interest rates are set to be a powerful drivers for funds management businesses again this year even if volatile markets continue.
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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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