July 26, 2017 / 6:21 AM / 2 years ago

Jupiter Fund Management first-half assets up 16 percent thanks to markets, new money

LONDON (Reuters) - British asset manager Jupiter Fund Management (JUP.L) posted a 16 percent rise in total assets under management during the first half of the year, boosted by market gains and net inflows of new client money.

Total assets at the end of June were 46.9 billion pounds ($61.1 billion), it said in a statement, up from 40.5 billion at the end of December, helped by net inflows of 3.6 billion pounds, including 3.4 billion pounds into its mutual funds.

The results mirror the pattern set by emerging markets-focused Ashmore (ASHM.L), which reported a 5 percent increase in fourth-quarter assets earlier this month. Peer Schroders (SDR.L) releases interim results on Thursday.

“Jupiter has made significant progress in the first half of 2017 with healthy net inflows and continued strong investment outperformance after all fees underlining the ongoing success of our diversification strategy,” Chief Executive Maarten Slendebroek said in the statement.

In the process of expanding its business across continental Europe, the company said variable staff costs had risen during the period to 38 million pounds, from 32 million a year earlier.

Shares in Jupiter have enjoyed a strong run since the start the year, buoyed in part by a belief it could be a target for sector consolidation, and after initially trading higher at the open, were down 2.6 percent at 0715 GMT.

Performance was strong across its funds, particularly in equities and fixed income, it said, while sales of its fixed income, absolute return and global emerging markets strategies were also strong, it said.

Slendebroek said the firm had produced “excellent” investment performance during the period, with 81 percent of its assets in funds performing ahead of the median return of peers or their benchmark after fees over three years.

Over the same period the FTSE 100 index .FTSE of leading British shares rose 2.4 percent.

The rise in assets drove a 19 percent increase in management fees to 186.5 million pounds and a 10.7 percent increase in pretax profit to 93.9 million pounds, it said.

The company said it planned a 51 percent increase in the interim dividend to 6.8 pence a share, as part of a plan to gradually rebalance the size of the interim dividend compared to the final dividend.

Calling the results “solid”, Shore Capital analyst Paul McGinnis kept his ‘hold’ rating on the stock given its valuation and heavy exposure to the UK market, under the regulatory spotlight by markets watchdog the Financial Conduct Authority.

“We continue to regard Jupiter as a well-run asset manager successfully executing an international expansion strategy,” he said in a note to clients.

“However, Jupiter retains a very high exposure to the UK retail market where its around 50 percent operating margins would appear to be a red rag to a bull called the FCA, which is using this metric as its main stick with which to beat the asset management industry for being non-competitive.”

Reporting by Simon Jessop; Editing by Maiya Keidan/Keith Weir

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