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Perpetual says net outflows signal global active management challenges

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Perpetual says its substantial net outflows reflect a “difficult period” for active asset managers globally.

In the three months to 31 December, Perpetual recorded net outflows of $4.3 billion in its asset management business, something it pinned on a “difficult period” globally for active asset managers, and the worst quarter in 15 years for active equity fund flows.

Perpetual, however, boasted a “pleasing” upward bump of 1 per cent in its total assets under management (AUM) to $213.9 million, driven by its exposure to global markets, as well as “the resilience the business has through its exposure to various markets, currencies, and client-types”.

The firm also reported that Pendal Group AUM has been “stable” at approximately $110 billion since acquisition in January last year.

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Breaking down the results of its asset management business, Perpetual reported that Barrow Hanley’s AUM increased by 3 per cent on the September quarter to $73 billion, driven by “favourable equity market movements of $5.7 billion”. J O Hambro Capital Management’s AUM was $39.8 billion, down 1.5 per cent compared to a quarter earlier, while Pendal Asset Management’s AUM added 2.3 per cent to expand to $42 billion.

Perpetual Asset Management’s AUM was $20.3 billion, up 1.1 per cent compared to the September quarter, impacted by net outflows of $0.3 billion, but offset by higher markets, while TSW’s AUM was $28.7 billion, down 2.5 per cent, with lower currency and net outflows of $1.6 billion impacting the quarterly result.

“Investment performance across the group remains strong, with 78 per cent of strategies outperforming their benchmarks over the three-year time horizon, which positions us well as equity markets rebound,” said chief executive officer and managing director Rob Adams.

“We remain focused on completing the integration of Pendal. Pleasingly, we are ahead of schedule in delivering the promised $80 million of run-rate expense synergies. While our overall target of $80 million is unchanged, we are ahead of our interim target of achieving 50 per cent by January 2024,” Mr Adams added.

Perpetual also reported a positive three-month period for its debt markets services (DMS) and managed funds services (MFS) businesses, which continued to perform well in a higher interest rate environment.

Namely, the DMS division recorded FUA of $715 billion, up 2 per cent, while the MFS division’s FUA was $482 billion, up $0.9 billion. The total FUA of Perpetual’s corporate trust was $1.2 trillion as at 31 December, up 1 per cent on the previous quarter.

Elsewhere, the firm’s wealth management business experienced a 4 per cent growth in its funds under advice (FUA) to $19.1 billion as at 31 December, underpinned by positive market movements.

As part of its update, Perpetual also reiterated its total expense growth guidance of between 27 and 31 per cent for the 2024 financial year.

In December, Perpetual announced that it had rejected a $3 billion takeover offer from Washington H. Soul Pattinson and Company (WHSP).

In its offer submitted on 21 November, WHSP proposed to acquire all of Perpetual’s shares by way of a scheme of arrangement and undertake a simultaneous demerger of Perpetual Asset Management, to be distributed in-specie to existing Perpetual shareholders.

Meanwhile, WHSP would have retained 100 per cent of the Perpetual Wealth Management and Perpetual Corporate Trust businesses in exchange for WHSP shares while assuming responsibility for all group net debt and stranded group costs.

Perpetual, however, rejected the offer, having evaluated that it “materially” undervalued the firm.

Perpetual says net outflows signal global active management challenges

Perpetual says its substantial net outflows reflect a “difficult period” for active asset managers globally.

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Maja Garaca Djurdjevic

Maja Garaca Djurdjevic

Maja's career in journalism spans well over a decade across finance, business and politics. Now an experienced editor and reporter across all elements of the financial services sector, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies.

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