Fund managers declare: It's not FUM anymore

Platinum profits down, praying for recovery

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published August 17, 2012 5:06 pm AEST

Platinum Asset Management (ASX: PTM) has seen its share price fall by 4.2% to $3.69 at the close, after the company reported a disappointing 2012 financial year result.

Net profit has fallen 15.8% to $126.4m, as revenues fell 14.3% to $226.7m. The company declared a 13-cent final dividend, fully-franked, taking the total dividend for the year to 21 cents.

Like many fund managers, Platinum has been struggling with the poor performance of the global equity markets. Funds under management (FUM) declined from $17.8 billion at the start of the year to $14.9 billion, due to outflows of $1.7 billion together with a decline in investment performance of $1.1 billion.

Managing director and Platinum's largest shareholder, with 57.6% of the company, Kerr Nielsen, noted that there has been a discernible loss of enthusiasm for equities among private investors. He went on to say that many have decided to pull out of equity markets and invest instead in fixed interest securities and bond funds.

K2 Asset Management (ASX: KAM) has suffered the same issues as Platinum, but on a larger scale. Revenues fell 65% on the back of falling FUM and the company reported a loss for the 2012 financial year. Treasury Group Ltd (ASX: TRG), which invests in a number of small boutique fund managers, has also seen its FUM fall, but only by 2.3% over the year, thanks to recent mandate wins. The company has yet to report its 2012 results, but is expecting a fall in profit from $10m in 2011 to between $7.5 and $8.0m.

It's not just fund managers that are hitched to the markets wagon. ASX Limited (ASX: ASX), the owner and operator of Australia's largest stock exchange, announced that its profit fell 2.9%, thanks to falling revenues, mainly due to lower trading volumes in the market.

The Foolish bottom line

Fund managers and stock exchange operators are likely praying for a return in confidence and activity on the equity markets. Although comments by Platinum's Kerr Nielsen, suggest uncertainty looks set to continue for some time.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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