These days, most of us are working to build up a big superannuation account to make sure there is something to live off of in the golden years. Instead of having a company just manage and grow your wealth, how much could you earn by investing directly in them?
To find out, we want to see what kind of investment styles they use to generate profits, the dividend yield and what the total shareholder return has been both over the long- and mid-term.
IOOF Holdings (ASX: IFL) does financial planning and portfolio administration, as well as stockbroking, estate planning/administration and trustee services. At the end of September, it had $124.7 billion in client funds. It's 10-year total shareholder return average annual rate was 11.25%, and its five-year average annual rate was 23.69%.
It offers a variety of investment products for both domestic and international shares that cater to clients' individual needs. Its dividend yield is 4.99%, and over the past year its share price is up 25.3%. Its return on equity in 2013 was 13.5% and its NPAT before abnormals was $109.4 million, up 13.1% from $96.7 million.
Wealth and investment management company AMP (ASX: AMP) has its AMP Capital fund management to invest in such assets as equities, fixed interest, property, infrastructure, and other managed funds, as well as providing management services for commercial, infrastructure and retail properties.
It has a 5.66% dividend yield, yet over the past 12 months its share price is down 7.3% to $4.42. Its 10-year total shareholder return was an average annual rate of 5.38%, and its 5-year rate was 1.67%, so it hasn't recovered in share price well since the GFC. It did raise its NPAT before abnormals from $897 million to $947 million, or 5.5% in 2013, continuing its rise since a 2008 bottom in earnings.
Perpetual (ASX: PPT) operates in funds management, financial planning and advisory, and trustee services. Its 2013 NPAT before abnormals grew to $74.7 million from $64.2 million previously, scoring a 16.3% rise.
Its 10-year total shareholder return was an average annual rate of 6.02%, with its 5-year rate higher at 8.51%. Over this past year it has racked up an impressive 40.6% rise in share price, going from $31.61 to $44.44 currently. It has a 2.93% dividend yield.
Foolish takeaway
The GFC knocked many funds management companies hard when equities took a plunge in 2008-2009. Since then, the domestic market has recovered, although not as strongly as the US stock market, but that is also due to its quantitative easing, which made equities more attractive and profitable than bonds.
Investors seeking returns with good growth potential can do their investigating, and home in on those individual companies that offer both. There can be a place in your portfolio for funds and investment management companies to build a foundation of stable earnings.
