Listed investment manager Challenger's funds management division has reached $31 billion in funds under management (FUM) for the year ending 30 June 2012, representing a 31 per cent increase on the previous year, with net flows of $4.2 billion.
The result included $1.1 billion from the acquisition of Asian emerging market specialist MIR Investment Management by Fidante Partners, Challenger's boutique funds management umbrella brand.
"We have a contemporary boutique model, which is driving very strong flows," Challenger chief executive Brian Benari told InvestorDaily.
"We've now had six consecutive periods of strong inflows whilst the market has generally been experiencing outflows, so I think that's a testament to what the model does, which is ultimately align the investors with the managers and Challenger."
Its aligned funds management business addressed the institutional side of the market, Benari said.
"What we can see is that the institutional side of the market is looking more and more at benchmarks, so absolute returns-style focus, which is similar to the approach that our life company uses," he said.
"As a consequence, what we're seeing is a growth in the number of institutional investors that are happy to co-invest in our life company across fixed income, property and infrastructure being the three key asset classes."
Challenger reported normalised net profit after tax (NPAT) of $297 million for the year ending 30 June 2012, a 20 per cent increase on the prior corresponding period. Statutory NPAT was $149 million.
Challenger Funds Management would look to acquire more investment managers as the opportunities arose, however, it would remain focused on how it could add value to its existing boutiques, Benari said.
"We're always on the lookout for opportunities, but I don't think anything's changed particularly in the last six months - it's far from the focus of 'let's put on the next boutique'," he said.
"As the opportunities arise, we'd certainly hope to put on more, but even outside of that there are opportunities of expanding and continuing to grow our pre-existing boutiques by setting up new strategies."
Fund managers in the international equities space would be ideal as Challenger attempted to establish balance in its portfolios, he said.
"What we can see is that there's plenty of growth opportunities, given that investors in Australia are looking to take exposure in offshore equity positions," he said.
In addition, he said there were opportunities to set up new funds in its existing boutique fund managers.
Challenger's outlook for growth continues to be positive for 2013, targeting 15 per cent retail annuity sales growth, 10 per cent net retail book growth of $675 million and $440 million to $450 million in cash earnings for the life company.
