July 29, 2019 / 6:02 AM / 4 months ago

Australian IFM Investors gets deluge of inflows as listed rivals hemorrhage clients

SYDNEY, July 29 (Reuters) - Australia’s IFM Investors grew funds under management by almost a third in the year to June 30, the country’s second-largest infrastructure investor said on Monday, as rivals such as AMP Ltd are losing clients following misconduct revelations.

Investors are switching from listed managers into private profit-for-member funds established to provide for the retirement of workers - known locally as industry superannuation funds.

The shift comes after a public inquiry last year exposed widespread misconduct at AMP and other big listed fund managers.

Australia’s largest commercial bank, Commonwealth Bank and AMP have also been sued by investors over the revelations, including fee gouging and profiteering.

IFM, which invests on behalf of 27 Australian pension funds and global institutional investors, said net investment flows received from clients grew by over two thirds to A$22 billion ($15.19 billion) in the 2018-2019 financial year.

Most of the 70.5% growth had come from Australian investors, Chief Executive Brett Himbury said in a media call, as the government-ordered inquiry had highlighted the better performance and value of industry funds compared with vertically-integrated rivals.

IFM’s pre-tax statutory profit for the year was A$114 million, down from A$122 million in 2018 that included extraordinary gains. Excluding those non-recurrent gains, pre-tax profit was up 37 percent.

“The profit that we’ve made now enables us to - on a longer term basis ... to get the prices down and the returns up for our investors,” Himbury said. “So pricing will continue to be the strategic priority.”

Assets under management had grown 30.8% to A$140 billion.

The fund, which specialises in infrastructure investments around the world, as well as other alternative illiquid assets such as private equity and privately owned property and debt, said inflows were also driven by demand for unlisted assets.

“There is more capital seeking out returns in a low-interest-rate environment and the supply-and-demand dynamic makes it tougher (to get good returns),” Himbury said.

But he said that IFM’s large scale and having a long-term investment horizon gave it a competitive advantage.

“We still think that there are opportunities there, particularly if you’ve got scale - where you can get into opportunities that others can’t get into, you can drive better terms that others aren’t able to drive,” he added.

$1 = 1.4482 Australian dollars Reporting by Paulina Duran; Editing by Stephen Coates

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