29 Apr 2019 07:00
29 April 2019
LEI: 2138005C7REHURGWHW31
River and Mercantile Group PLC
Third Quarter Trading Update
31 March 2019
River and Mercantile Group PLC (R&M), the investment management and solutions business, today provides a trading update for the three and nine months ended 31 March 2019.
Summary of the three months ended 31 March 2019:
· Fee earning AUM/NUM increased by 6% to £36.3bn.
· Gross sales for the period were £1.2bn.
· Net sales for the period were £0.5bn, equivalent to 1% of opening AUM/NUM. We have continued to see demand for Institutional Equity Solutions and there has been increased pipeline activity in Fiduciary Management.
· Investment performance generated £1.1bn and was positive across all divisions.
· Net rebalance and transfers added £0.6bn.
· Performance fees earned in the three months ended 31 March 2019 are estimated to be £0.5m from Fiduciary Management.
Summary of the nine months ended 31 March 2019:
· Fee earning AUM/NUM increased by 7% to £36.3bn.
· Gross sales for the period were £4.1bn.
· Net sales for the period were £1.7bn, equivalent to more than 5% of opening AUM/NUM. This included £1.2bn from Fiduciary Management and £1.0bn from Institutional Equity Solutions.
· The strong investment result during the quarter returns investment performance to positive territory for the year to date.
· Performance fees are estimated to be £6.9m, of which £2.0m is from Equity Solutions and £4.9m is from Fiduciary Management.
· Advisory fees are estimated to be £7.5m.
Mike Faulkner, CEO of River and Mercantile, commented:
Having positioned our clients cautiously in previous periods, I stated in the last trading statement that our macroeconomic signals indicated that risk assets were likely to provide positive returns. We therefore adapted our client portfolios accordingly and were able to capture the market returns for them. This ability to respond quickly to asset allocation opportunities is one of our key differentiating capabilities.
This quarter has seen an increase of more than 6% in AUM/NUM. This is a strong period of growth for the group following the more challenging conditions in the second quarter. It has been very encouraging to see the contribution to growth from both investment performance and net rebalancing.
Investment performance for the period was positive across all divisions, with Fiduciary Management and Equity Solutions adding £0.6bn and £0.4bn respectively. Additionally, we saw positive flows in Fiduciary Management and a £350m inflow into the Group's Dynamic Asset Allocation fund which now has half a billion of AUM and a four and a half year track record.
We continue to have a positive outlook for equity markets from here and the results this period position us well for the final quarter of our financial year.
Assets Under Management (AUM) and Notional Under Management (NUM)
AUM/NUM for the three months ended 31 March 2019.
Equity Solutions | |||||||||||
£'m | Fiduciary Management | Derivative Solutions | Wholesale | Institutional | Total | Total AUM/NUM | |||||
(AUM) | (NUM) | (AUM) | (AUM) | (AUM) | |||||||
Opening fee earning AUM/NUM | 10,760 | 18,817 | 1,438 | 3,154 | 4,592 | 34,169 | |||||
Sales | 640 | 477 | 41 | 86 | 127 | 1,244 | |||||
Redemptions | (133) | (495) | (108) | (39) | (147) | (775) | |||||
507 | (18) | (67) | 47 | (20) | 469 | ||||||
Net rebalance and transfers | 93 | 483 | - | - | - | 576 | |||||
Net flow | 600 | 465 | (67) | 47 | (20) | 1,045 | |||||
Investment performance | 624 | - | 126 | 309 | 435 | 1,059 | |||||
Fee earning AUM/NUM | 11,984 | 19,282 | 1,497 | 3,510 | 5,007 | 36,273 | |||||
Mandates in transition (31 March 2019) | - | 20 | - | - | - | 20 | |||||
Redemptions in transition (31 March 2019) | - | - | - | - | - | - | |||||
Mandated AUM/NUM | 11,984 | 19,302 | 1,497 | 3,510 | 5,007 | 36,293 | |||||
Increase/(decrease) in fee earning assets | 11.4% | 2.5% | 4.1% | 11.3% | 9.0% | 6.2% | |||||
Increase/(decrease) in mandated assets | 11.8% | 2.6% | 4.1% | 5.0% | 4.7% | 5.8% | |||||
AUM/NUM for the nine months ended 31 March 2019.
Equity Solutions | |||||||||||
£'m | Fiduciary Management | Derivative Solutions | Wholesale | Institutional | Total | Total AUM/NUM | |||||
(AUM) | (NUM) | (AUM) | (AUM) | (AUM) | |||||||
Opening fee earning AUM/NUM | 10,642 | 18,622 | 1,887 | 2,692 | 4,579 | 33,843 | |||||
Sales | 1,680 | 928 | 172 | 1,280 | 1,452 | 4,060 | |||||
Redemptions | (472) | (1,140) | (393) | (306) | (699) | (2,311) | |||||
1,208 | (212) | (221) | 974 | 753 | 1,749 | ||||||
Net rebalance, acquisitions and transfers | (260) | 872 | - | - | - | 612 | |||||
Net flow | 948 | 660 | (221) | 974 | 753 | 2,361 | |||||
Investment performance | 394 | - | (169) | (156) | (325) | 69 | |||||
Fee earning AUM/NUM | 11,984 | 19,282 | 1,497 | 3,510 | 5,007 | 36,273 | |||||
Mandates in transition (31 March 2019) | - | 20 | - | - | - | 20 | |||||
Redemptions in transition (31 March 2019) | - | - | - | - | - | - | |||||
Mandated AUM/NUM | 11,984 | 19,302 | 1,497 | 3,510 | 5,007 | 36,293 | |||||
Opening mandated AUM/NUM | 10,605 | 18,616 | 1,887 | 2,880 | 4,767 | 33,988 | |||||
Increase/(decrease) in fee earning assets | 12.6% | 3.5% | (20.7%) | 30.4% | 9.3% | 7.2% | |||||
Increase/(decrease) in mandated assets | 13.0% | 3.7% | (20.7%) | 21.9% | 5.0% | 6.8% | |||||
Performance and advisory fees
Performance fees earned in the three months ended 31 March 2019 are estimated to be £0.5m, all from Fiduciary Management. Performance fees earned in the nine months ended 31 March 2019 are estimated to be £6.9m. This includes the previously announced performance fee from the River and Mercantile UK Micro Cap Investment Company Limited of approximately £2.0m; and approximately £4.9m from Fiduciary Management. Advisory fees earned in the nine months are estimated to be £7.5m.
Notes to editors:
River and Mercantile Group PLC (R&M) is an investment solutions business with a broad range of services, from consulting and advisory, to fully delegated fiduciary management and asset management.
R&M is focussed on creating investment solutions for institutional pension schemes, insurance and financial intermediaries.
For further information, please contact:
River & Mercantile Group PLC
Kevin Hayes
Chief Financial Officer
Tel: +44 (0)20 3327 5100
Forward-looking statements
This announcement contains forward-looking statements with respect to the financial conditions, results and business of the Group. By their nature, forward looking statements involve risk and uncertainty because they relate to events, and depend on circumstances that will occur in the future. River and Mercantile Group's actual results may differ materially from the results expressed or implied in these forward looking statements. Nothing in this announcement should be construed as a profit forecast.
Notes:
Assets Under Management (AUM) represents the assets over which we act either as a discretionary investment manager on a partial or fully delegated basis in accordance with an investment management agreement.
Fee earning AUM/NUM represents amounts on which management fees and performance fees are charged.
Notional Under Management (NUM) represents the aggregate billing notional of derivative contracts and is the basis on which management fees are charged.
Net rebalance and transfers represents the net change in billing notional values of Derivatives (including Gilts) from existing client mandates and can increase or decrease based on changes in the underlying hedging strategies.
The category also represents transfers of client assets between divisions. The different billing structures between divisions, including the use of AUM or NUM, means that transfers will not net to zero.