31 Oct 2018 07:00
31 October 2018
LEI: 2138005C7REHURGWHW31
River and Mercantile Group PLC
First Quarter Trading Update
30 September 2018
River and Mercantile Group PLC (R&M), the investment management and solutions business, today provides a trading update for the three months ended 30 September 2018.
Highlights for the three months ended 30 September 2018:
· Fee earning AUM/NUM increased by 3.3% to £35.0bn.
· Gross sales for the period were £1.2bn, of which £0.6bn was from the Equity Solutions division.
· Net inflows for the quarter were £1.1bn, equivalent to 3.3% of opening AUM/NUM.
· Mandates in transition were £0.4bn at the quarter end.
· Mandated AUM/NUM increased by 4.1% to £35.4bn.
· Investment performance was marginally positive across all divisions.
· Performance fees earned in the three months ended 30 September 2018 are estimated to be £3.3m.
Mike Faulkner, CEO of River and Mercantile, commented:
"This has been another positive quarter of growth for the Group, driven by strong net inflows resulting in a 3.3% increase in fee earning AUM/NUM. This growth has been achieved in an environment where market conditions were difficult due to a range of political and economic factors.
While we saw some positive equity returns during the quarter, more notable is the significant losses seen in equity markets since the quarter end. We have been advising clients to prepare for a downturn, and it would appear this is at least to some degree upon us. This ability to guide clients on what conditions to expect is central to our strategy as a firm.
The current weakness in markets will clearly impact absolute returns from our Equities division, however the Group is highly diversified and therefore the effect on our overall numbers will likely be more muted than it is for others. We are also well positioned to support our clients during these market conditions, given our ability to offer strategies that seek to manage these risks and even profit from them.
As a result, we are continuing to see high levels of interest across our client base in our diverse range of investment strategies and solutions, and our pipeline of new mandates continues to be strong. In addition, we have been developing new strategies to help clients profit from the end of the downturn when it comes.
We therefore consider that, even though weak absolute equity returns will obviously affect us, we remain well positioned to grow given the diversified nature of our business and our approach to engaging with clients."
Assets Under Management (AUM) and Notional Under Management (NUM)
AUM/NUM for the three months ended 30 September 2018.
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 | 454 | 148 | 79 | 492 | 571 | 1,173 | |||||
Redemptions | (181) | (300) | (130) | (27) | (157) | (638) | |||||
273 | (152) | (51) | 465 | 414 | 535 | ||||||
Net rebalance and transfers | (5) | 580 | - | - | - | 575 | |||||
Net flow | 268 | 428 | (51) | 465 | 414 | 1,110 | |||||
Investment performance | 9 | - | (19) | 22 | 3 | 12 | |||||
Fee earning AUM/NUM | 10,919 | 19,050 | 1,817 | 3,179 | 4,996 | 34,965 | |||||
Mandates in transition (30 September 2018) | 300 | 120 | - | - | - | 420 | |||||
Redemptions in transition (30 September 2018) | - | - | - | - | - | - | |||||
Mandated AUM/NUM | 11,219 | 19,170 | 1,817 | 3,179 | 4,996 | 35,385 | |||||
Increase/(decrease) in fee earning assets | 2.6% | 2.3% | (3.7%) | 18.1% | 9.1% | 3.3% | |||||
Increase/(decrease) in mandated assets | 5.8% | 3.0% | (3.7%) | 10.4% | 4.8% | 4.1% | |||||
Performance fees
Performance fees earned in the three months ended 30 September 2018 are estimated to be £3.3m, which includes the previously announced performance fee from the River and Mercantile UK Micro Cap Investment Company Limited of approximately £2.0m and approximately £1.3m relating to Fiduciary Management.
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
Chris Rutt
Deputy Chief Financial Officer and Investor Relations
Email: chris.rutt@riverandmercantile.com
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.