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Perpetual reports higher AUM in spite of ‘disappointing’ mandate losses

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The group has benefited from positive market movements and strong investment performance.

Perpetual has reported that its assets under management (AUM) increased by $1.7 billion or 0.8 per cent over the June quarter to a total of $212.1 billion.

In its fourth quarter business update published to the ASX on Thursday, Perpetual indicated that positive markets and strong investment performance had helped boost its AUM by approximately $4.5 billion, while positive foreign exchange movements contributed $2.4 billion.

However, net outflows of $5.1 billion – mainly in Perpetual’s global and international equities strategies and fixed income – dragged down the firm’s AUM during the fourth quarter.

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“As foreshadowed in our third quarter business update, the macro environment has remained challenging and is driving general caution towards equities, particularly in the US,” commented Perpetual chief executive officer and managing director Rob Adams.

“Disappointingly, we experienced mandate losses from a client in each of J O Hambro Capital’s International Select strategy (previously announced in our third quarter business update) and Pendal’s Fixed Interest strategy, respectively, which contributed to group net outflows.”

J O Hambro Capital Management’s AUM fell from $42.1 billion in the March quarter to $41.2 billion in the June quarter, with net outflows of $2.3 billion that were partially offset by positive market movements and a favourable exchange rate movement.

Barrow Hanley’s AUM rose by 5 per cent to $69.8 billion, on the back of strong investment performance and positive markets ($2.7 billion) and favourable foreign exchange movements ($0.9 billion) but partially offset by net outflows ($0.3 billion).

Pendal Asset Management’s AUM was down 2 per cent to $40.3 billion, with net outflows of $1.2 billion as a result of one large mandate loss in fixed interest. Investment performance and positive market movements helped deliver a $0.4 billion boost.

Perpetual Asset Management’s AUM fell by 2 per cent to $20.6 billion, with $0.4 billion in net outflows and distributions. Trillium’s AUM rose by 3 per cent to $10.0 billion, while TSW’s AUM lifted 1 per cent to $30.1 billion.

“Investment performance across the group remains strong with 79 per cent of the group’s strategies outperforming their benchmarks over the important three-year time horizon,” said Mr Adams.

“In particular, we have seen very strong investment performance in Perpetual Asset Management in Australia, and Barrow Hanley and TSW in the US. Our new business pipeline is healthy and growing with Barrow Hanley having recently won new client mandates totalling approximately $1.5 billion which are expected to fund in the current quarter.”

The total funds under administration for Perpetual’s corporate trust business remained flat over the quarter at $1.16 trillion.

Meanwhile, the total funds under advice in Perpetual’s wealth management business lifted 1 per cent to $18.5 billion. Total average funds under advice during the three months to 30 June was $18.6 billion versus $18.3 billion in the three months prior.

“In our corporate trust business, performance in key parts of the business remains resilient as we face into the potential for a softer mortgage and property market and Perpetual Digital continues to attract new, significant clients,” Mr Adams said.

“Our wealth management business continues to be a solid performer as a leading private wealth advisor in the Australian market, delivering another quarter of positive net flows.”

Ahead of Perpetual’s FY23 results on 24 August, the firm said that significant items post tax for the financial year were expected to sit within the range of $99.4 million to AU$106.6 million.

According to Perpetual, this includes transaction and integration costs, costs relating to acquired intangibles amortisation, unrealised gains/losses on financial assets, as well as fair value movements on accrued incentive compensation.

Additionally, the firm said the integration of Pendal Group “continues to progress well”, with further information expected to be released as part of the FY23 results.

“We have continued to focus on integrating Pendal Group into our business and while we are only six months in, we have already made solid progress in delivering the synergy benefits of the acquisition which are tracking to plan,” commented Mr Adams.

Perpetual reports higher AUM in spite of ‘disappointing’ mandate losses

The group has benefited from positive market movements and strong investment performance.

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Jon Bragg

Jon Bragg

Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.

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