Macquarie, Perpetual, IOOF: tipped for Super growth

Fund inflows expected to increase, expanding management fees

Darryl Daté-Shappard

I started investing after finding a copy of Peter Lynch's "Beating the Street" in the English book section of a library in Japan, where I was living at the time in 1997. Seeing that regular people can find investment ideas just as easily as professionals, I used the philosophy of that book to invest in stocks in Japan, and later in Australia after moving in 2001. I also have experience in property investing, and went on to complete my masters degree in Applied Finance at QUT in Brisbane. I follow the investment style of Peter Lynch, Phillip Fisher and Warren Buffett-- knowing what you invest in, doing your homework to keep up with a stock's story and holding a healthy skepticism of what the stock market calls "value".

Published May 13, 2014 8:00 am AEST

Non-bank financial services companies have enjoyed a good share price climb on the back of a rising stock market. Many of them were laid low during the GFC and now they have a lot more air in the tires to keep on rolling up.

Some of the higher earnings were due to gains in investments made by the companies, but another part came from the management fees for the sheer volume of money coming back into the market.

Investors returning to the market

Many investors who got scared out of the market are beginning to move back in, but some are using self-managed super funds (SMSF) as the vehicle to return in. Now it is much easier to personally manage finances and even do share investing through DIY super and some regular superannuation packages offer personal selection of shares to trade in.

Increasing super fund assets

The companies that can attract more super customers will increase their funds under management and even though they only receive a very small percentage for management fees of the assets, their total fees can rise, adding to earnings.

Here are three companies that could expand their revenue from management fees as well as profit from share investment returns.

Macquarie Group Ltd (ASX: MQG)- The investment bank has huge amounts of assets under management (AUM), part of which are from domestic and international superannuation funds. Individual clients can also set up superannuation packages.

Perpetual Limited (ASX: PPT)- The financial services company increased its funds under management (FUM) to $31 billion at the end of March, up from a little under $25 billion about a year ago. $1.3 billion of that came from its acquisition of The Trust Company.

IOOF Holdings Limited (ASX: IFL)- This financial service provider offers financial products and wealth management. At the end of March it had $94.5 billion in funds under management and administration (FUMA), up 10% from a year ago.

Superannuation and SMSF customers in general will be wanting to put more into their funds to be tax effective and get the best return for their future. In addition, the percentage of salaries that will be mandatorily set aside for super is expected to rise from the current 9% to 12% or even 15% in the future. That potentially means more funds for these companies to manage.

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