Despite being a growing reservoir of funds under management, this critically important pool of capital is confronting mounting problems collating and disseminating key data in a timely manner.
The ratings house is pinning its growth strategy on a revamped methodology that increases the emphasis on governance to 25 per cent – a timely move considering APRA’s proposed reforms.
Listed Aussie managers outperform for revenue growth
(Pictured: Jeffrey Levi)
Listed fund management companies delivered an average of 33 per cent profit margin in 2014, the highest in five years, on revenue growth of 13 per cent, accord to a study by Casey Quirk & Associates. Australia’s seven listed firms outperformed all others in terms of revenue growth, with an average of 25 per cent.
UK firms, which number 10, underperformed the rest for revenue growth, generating a median growth rate of only 3 per cent and with 40 per cent suffering revenue declines. Canadian firms averaged 14 per cent revenue growth over the year and US firms 11 per cent. It was the third consecutive year that Australian firms outperformed the others for revenue growth.
There were 62 listed firms in the study, with 33 from the US, eight from Canada, one from Japan and three from continental Europe (as well as those from Australia and the UK). They have a total of US$14.3 trillion under management. Twelve of the firms focus on alternatives.
Casey Quirk is a US management consulting and research firm which specializes in funds management. It opened an Asia Pacific office in Hong Kong in 2013.
Jeffrey Levi, a Casey Quirk partner and head of the firm’s knowledge centre, said many UK firms remained aligned with slower growth buyer segments and geographic regions. “They have not been sufficiently aggressive at building new active and innovative beta capabilities or repositioning against higher-growth markets creating headwinds in firm growth,” he said. “That being said, we are seeing some UK firms making significant investments to take advantage of key opportunities.”
The alternatives managers garnered more net fund flows than their traditional counterparts for the fifth consecutive year. Alternatives-focused managers had an average 11 per cent net inflows compared with only one percent for traditional managers in 2014. In 2013 they had 13 per cent versus 5 per cent for traditional managers.
Levi said: “Business complexity is at an all-time high. Managers are being challenged by both buyers and shareholders in a lower-growth environment. Buyers want highly tailored outcome-oriented solutions while shareholders want to see significant cashflow generation through more scalable offerings. Product development and delivering a distinctive client experience will be critical for success.”
The Australian firms in the study are: BT Investment Management, Challenger, K2 Asset Management, Magellan, Perpetual, Platinum and Treasury Group.
