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Should you buy BT Investment Management Ltd shares?

Over the last four months the shares of leading fund managers Magellan Financial Group Ltd (ASX: MFG) and Platinum Asset Management Limited (ASX: PTM) have put on strong gains for their respective shareholders.

During this time Magellan’s shares have risen 18% and Platinum’s shares have climbed an even more impressive 34%.

One fund manager which hasn’t fared quite as well is BT Investment Management Ltd (ASX: BTT). Its shares are up 6.7% during the same period, which means they have underperformed the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) slightly. The benchmark index is up 6.9% over the last four months.

Should you snap up shares today?

I am a big fan of BT Investment Management and believe its JO Hambro business in the United Kingdom alone makes it a great option for investors.

As does the level its shares are trading at today. At present BTIM’s shares are changing hands at a little over 17x trailing earnings. By comparison, the shares of Magellan and Platinum are priced at about 25x earnings each.

While I wouldn’t expect BTIM to command such a premium due to its exposure to any fallout from the Brexit, I think it could rerate at least a touch higher over the next 12 months if funds under management remain strong.

I’m not alone in this view. A note out of Macquarie towards the end of last year revealed that its equity analysts have given BTIM an outperform rating with a $12.30 price target.

This price target implies upside potential of over almost 11% for its shares over the next 12 months. Add in its partially franked dividend and the total potential return increases to over 15%.

I think this makes it well worth considering today. However, its next funds update is likely to be released this week, so it may be prudent to wait for that before making a move.

Until then, here are three more blue chip shares which I think investors ought to consider buying.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Platinum Investment Management Limited. 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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