Growth within its institutional business helped fund house Jupiter post sharply higher profits, despite writing down the value of its previous acquisitions by more than £40mn.
The listed asset management firm published its results for the year to the end of December 2023, showing an underlying profit of £105.2mn, a 36 per cent increase on the previous year.
Chief executive Matt Beesley said the increase was due to both better cost management and an increase in assets under management (AUM) of 4 per cent to £52.2bn.
Of that asset under management growth, there were net outflows from Jupiter’s funds of £2.2bn, a reduction on the more than £3bn of outflows from the previous year, but favourable market movements meant total assets rose.
The outflows were concentrated on the bond, UK and European equity desks.
Performance of some of the bond funds at Jupiter suffered as a result of the managers being long duration - more pessimistic on the economic outlook - during the course of 2023 than proved to be the case, as short duration bonds mostly outperformed.
Beesley highlighted the growth of the firm’s institutional business, which had net inflows of £1.8bn, and now accounts for just shy of 20 per cent of Jupiter’s total assets under management.
But this growth came at a cost with turnover down 7 per cent. This was partly as a result of the fees an asset management firm can charge institutional clients being lower than the charges typically levied on retail and advised clients.
In the results statement, Jupiter said its typical profit on money managed for retail and adviser clients was 78 basis points, while for the institutional business, it was 29 basis points.
Operating profits rose, despite decline in turnover, due to cuts to the cost base, with a 6 per cent reduction in costs that were not salaries or bonuses.
Part of this came from cutting the number of funds Jupiter operates by 25 per cent, with Beesley saying the extinguished funds account for just 0.7 per cent of the company’s total assets.
Among the fund’s to have inflows during the year were Global Equity Unconstrained, and the Asia desk.
Although cash profits were the aforementioned £105.2mn, the statutory profit) was £9.4mn, down more that 80 per cent from the previous year.
This is the result of the company reducing the value, on paper, of businesses it had previously acquired. These are paper losses, not cash losses.
Jupiter acquired Knightsbridge Asset Management and Merian Global Investors for a combined £570mn, but now believes them to be with £494mn, a reduction of £76mn, while other intangible assets were reduced by £18mn.
The company had redundancy costs of £2.2mn, down more than £1mn on the prior year.
david.thorpe@ft.com
