Despite the recent publicity around the tapering of its money-printing policies, the fact remains that a heavily indebted United States has little option other than to keep devaluing its debt in 2014. This will be done through loose monetary policies also aimed at keeping the US dollar low. Investors may then expect continued asset price appreciation next year, including an appreciation in global equities. Here are three financial services companies well positioned to benefit from US monetary policy.
Macquarie Group (ASX: MQG) is an innovative financial services organisation that has earnings heavily aligned to appreciations in global equity markets. The group recently announced a profit for the half-year ended 30 September up 39% on the prior corresponding period. The interim dividend was also up 33% on the prior corresponding period. The final full-year dividend is also likely to be substantially up as the bank's fees, commissions and other revenues from increased corporate activities synchronise with rising markets. The group's entrepreneurial drive mean it has surprised to the upside recently and with a growth-driven focus the stock price may have a long way to run yet.
Magellan Financial Group (ASX: MFG) is a specialist funds management business fast developing a reputation as a go-to manager for international equities in the Australian money management space. The most impressive aspect of its recent growth has been the consistently growing funds under management from both retail and institutional investors. The group appears to have found the recipe for a highly successful global sales and distribution strategy and in an extremely large global marketplace, future prospects look good. Investment success has seen also seen profits skyrocket. The FY 2013 profit before tax was three and a half times higher than the prior year. Another listed fund the group run is the Magellan Flagship Fund (ASX: MFF), its price touching a 52-week high recently. Its heavy exposure to large-cap US equities proving super successful and indicative of investment results that have proven so seductive to institutional and retail clients alike. Given the global outlook for asset price inflation and the group's strong track record the outlook remains positive.
Perpetual (ASX: PPT) is another investment manager that has seen some impressive performance recently. Evidently market sentiment towards its investment operations has been improving thanks to some strong investment returns. The group's Achilles' Heel had been fund outflows, however it recorded its first positive quarter of fund flows in seven years recently and profits have been fast rising since the group implemented a radical overhaul of its entire business in 2012. Much of the strategy involves cutting costs and full completion is scheduled for 2015. Earnings remain heavily leveraged to global equity markets and if the group maintains positive fund flows its star may continue to rise.
Foolish takeaway
Five years into the Fed's money-printing programme and the near constant effect has been asset price inflation. With the Fed still planning to pump another $75 billion liquidity a month into the US economy going into 2014, it appears a fair assumption that asset prices among developed economies will continue to rise. These three companies with their exposure to global equities and developed markets should continue to benefit.
