Perpetual (ASX:PPT) share price struggles despite ‘strong performance’

This comes after the release of the fourth quarter business update.

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The Perpetual Ltd (ASX: PPT) share price has fallen into the red after market open today.

The dip comes after Perpetual released its fourth quarter business update. After the market open, Perpetual shares slid 1.2% into the red, before making a slight recovery to the current market price.

Perpetual shares are now exchanging hands at $38.37 apiece, ~0.25% below the opening of $38.07.

Let’s comb over the financial services provider’s results in a bit finer detail.

Perpetual’s quarterly results

Perpetual recorded a net outflow of funds for the fourth quarter that surmounted to $2.3 billion.

Despite these outflows, its total assets under management (AUM) grew to $98.3 billion, a 3.1% increase from the previous quarter.

Perpetual also reports that underlying expenses for the year will come in at 3% higher than June 2020. This is in line with the previously outlined guidance of 1–3%.

Under its International Asset Management arm, the total expenses will place an additional 31% to the cost base of June 2020, and this comes in above the previous guidance of 28–30%.

The higher cost base is due to “higher costs associated with employee profit share schemes”, a result of outperformance by Trillium Asset Management and Barrow Hanley Global Investors in 2021.

Recall that Perpetual made the acquisition of Trillium in January 2020 and completed the Barrow Hanley transaction earlier this year.

Perpetual stated it was another “record quarter” of capital flows for Trillium, with “$361 million in net flows globally”.

Consequently, AUM for Perpetual Asset Management International grew 2.8% this quarter to ~$74 billion.

Other takeouts

Perpetual Asset Management Australia’s AUM grew 4.2% from the previous quarter, reaching $24.7 billion. This occurred on a backdrop of “positive investment markets and an improvement in the net flows profile”.

Additionally, Perpetual Private’s funds under advice grew 6% with positive inflows of $300 million across the quarter.

In contrast, its Corporate Trust’s funds under administration contracted 2%, which the company claims was “driven by the scheduled close of the RBA’s term funding facility”.

Speaking on the announcement, Perpetual chief executive Rob Adams said:

There has been further positive momentum achieved across all our divisions this quarter with a number of key strategic initiatives delivered, positioning us well for solid growth in this new financial year.

Regarding Trillium and Barrow Hanley:

We are increasingly well-positioned to take the world-class investment capabilities of Trillium and Barrow Hanley to key markets around the world having now established distribution teams in the US, the UK and shortly in Europe.

Foolish takeaway

The Perpetual share price has lagged the S&P / ASX 200 Index (ASX: XJO) today, even as the broad index dipped into the red in afternoon trading.

Perpetual’s AUM seems to be growing on a cumulative basis, despite choppy flows of investor capital. The firm states that recent acquisitions have been growth levers to the company.

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