Shares in GQG Partners Inc (ASX: GQG) climbed about 4% on Friday (at the time of writing) after the fund manager announced its full-year result, with investors appearing more focused on earnings resilience than on last year's outflow concerns.
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Why are shares edging higher?
The numbers themselves were solid. Revenue and net income both rose year on year, while operating margins expanded to 77%. Funds under management ended the year at US$163.9 billion, up 7.1%, despite US$3.9 billion in net outflows.
Net outflows are a result of when investors pull out more money out of the fund than the new money invested into the fund over a given period. For GQG, net outflows in 2025 were high at US$3.9 billion, but they were offset by strong investment performance.
GQG has spent much of the past year positioned away from the mega-cap technology and artificial intelligence rally that dominated global markets. Instead, its Global Equity strategy remains heavily tilted toward more traditional sectors. Its top holdings in that fund include Progressive, Coca-Cola, American Express, Cigna, Iberdrola, and Johnson & Johnson. These are all companies in traditional sectors that are better known for producing steady cash flows.
That positioning hurt relative performance during the height of last year's tech surge. However, it also leaves the portfolio looking markedly different from many benchmark-heavy global funds that are dominated by the big tech firms.
For investors, the question has been whether that stance represents stubborn underperformance or a disciplined approach of not chasing the hype of the moment and sticking to their investment style.
Perhaps the market is giving them some credit for the latter. The firm maintained a high operating margin and grew earnings even as performance fees fell and flows turned negative.
More than 98% of revenue remains asset-based, and the board declared a fourth-quarter dividend of 3.65 cents per share, reinforcing balance sheet strength and cash generation.
Despite today's announcement, it's been a difficult 12 months for GQG's share price. GQG shares are down 29% over the last 12 months, and 43% below their all-time high.
Whether today's results mark the start of a broader re-rating, however, will depend less on last year's numbers and more on whether GQG can stem the fund outflows and get investors excited about investing in their funds again.
