The ongoing pandemic has wreaked havoc on financial markets, led by the drastic deterioration in the world economy, stock exchanges showing bearish trends and market volatility spreading at the pace of the virus itself.
Global equity markets have experienced perhaps their worst quarter since the Global Financial Crisis of 2008, with unprecedented volatility as investors try to gauge the consequences of the world being restrained by lockdowns.
As the novel coronavirus continues to spread across the globe, people have various unsettling questions about their financial plans. In such circumstances, the role of investment managers becomes pivotal in mobilizing funds to business with robust balance sheet, decent cash flow and sustainable business models. Investment managers have been always been regarded as custodians of savers’ money.
Currently, with so much at stake, the pandemic has proved that even investment managers need to work together with governments, other shareholders, and banks. In this backdrop, let us look at the recent development of 4 ASX-listed investment managers-
Clime Investment Management Limited (ASX:CIW)
For two decades, CIW has been helping wholesale and sophisticated investor clients invest in Australian shares selected by its experienced investment professionals. Recently, the Company provided an update about the March quarter, which was particularly challenging as equity markets corrected sharply in light of COVID 19.
CIW registered gross AUM balances of ~ $874 million as at 31 March 2020, down 14% from $1,019 million at 31 December 2019. Gross FUM as at market close on 17 April was $908 million.
The Company has a strong balance sheet with ~ $10.2 million of liquid capital, including $4.8 million in cash as at 31 March 2020 and was capitalised at $22.4 million at the close-of-quarter share price of $0.40 per share.
The Company utilized the March quarter volatility to reposition portfolios by deploying capital into superior risk-adjusted opportunities. Amid the pandemic, the focus remains on long term horizons and highly profitable business as measured by return on equity and return on invested capital.
The net new inflows during the March quarter with Clime Private Wealth making a positive contribution in terms of providing advice and support for clients was a boon. It should be noted that during the March quarter, Clime Private Wealth improved client retention, resulting in net new inflows for the quarter.
The Company remains well positioned to continue to grow and diversify the group’s revenue streams to become an integrated wealth management business.
CIW traded at $0.380 on 24 April 2020 (01:00 PM AEST).
HUB24 Limited (ASX:HUB)
HUB connects advisers and their clients through innovative solutions that create opportunities. The business is focussed on the delivery of the HUB24 platform, growth of Paragem Pty Ltd and Agility Applications Pty Ltd and HUBconnect Pty Ltd, wholly owned subsidiaries.
Pertaining to the current situation, MD Andrew Alcock stated that financial advice is more important than ever, and the Company is currently in a strong position, having mobilised rapidly to continue to deliver for customers without interruption, thanks to the smart features and flexibility of HUB’s platform solution which is being adapted quickly.
In the March 2020 Quarter, Net Inflows were $1.4 billion (up 72% on pcp ), with Gross Inflows of $1.8 billion. FUA was reported at $15.1 billion at 31 March 2020 (up 32% on pcp).
In the Investment Trends Competitive Analysis and Benchmarking Report December 2019, HUB bagged Best Platform Managed Accounts Functionality, 4th year running. Wealth Insights Annual Service Level Report 2020 tagged it at Equal 1st place for Wealth Insights Platform Service Ranking Overall Satisfaction with the highest percentage of top ratings across all categories.
The Company intimated that revenue will be negatively impacted by the reduction in the official cash rate by the RBA and the market movement impact experienced to date is expected to negatively impact administration fees and therefore earnings for FY20. However, swelling transactional revenue, alterations in portfolio asset arrangement, and the consequence of tiered administration fees could possibly soften this impact.
HUB traded at $9.570, up 1.9% on 24 April 2020 (01:00 PM AEST).
Platinum Asset Management Limited (ASX:PTM)
One of Australia’s most trusted international investment managers, PTM updated that it has remained conservatively positioned amid a rapid rebound from one of the sharpest falls in market history.
The framework involves avoiding permanent impairment of capital in its investment approach. The Company sees stimulus as the main response. It has also been building value into the long side of the portfolio and maintaining a relatively large short book.
In March 2020, the Company experienced net outflows of ~ $426 million, including net outflows from the Platinum Trust Funds of ~$342 million.
PTM traded at $3.450 on 24 April 2020 (01:00 PM AEST).
Fiducian Group Limited (ASX:FID)
FID is a successful end-to-end financial services company in the fiercely competitive sector in Australia. The Company continues to back the trusted network of Fiducian Financial Planners to expand amid the Aussie lockdown condition.
FID recently intimated that its financial planning subsidiary, Fiducian Financial Services has facilitated the acquisition of a regional financial planning business. This pertains to its franchise office in Gippsland, Victoria.
This adds a further $56 million in Funds under Advice and is likely to add to the total Funds under Management, Administration & Advice of more than $7.1 billion (as at 31 March 2020).
CIW traded at $4.480 on 24 April 2020 (01:00 PM AEST).
While the global health and financial crisis continues to take unprecedented personal, economic and market toll across geographies, the role and sturdiness of investment managers will be integral to stability and survival. With all measures of support carefully targeted, a responsibility to help deliver long-term returns for the savers these companies represent, it will be interesting to gauge the fighters of this war.