30 Oct 2017 07:00
30 October 2017
River and Mercantile Group PLC
First quarter trading update
30 September 2017
River and Mercantile Group PLC (R&M), the investment solutions business today provides a trading update for the three months ended 30 September 2017.
Highlights for the three months ended 30 September 2017:
· Mandated AUM/NUM increased by 2%.
· Fee earning AUM/NUM decreased by 1% to £31.0bn.
· Sales in the quarter were £0.9bn.
· Redemptions in the quarter were £1.6bn, including £0.6bn of structured equity transactions.
· Investment performance generated £0.3bn and was positive across all divisions.
· Performance fees earned in the three months ended 30 September 2017 are estimated to be £2.5m, all of which relates to the Fiduciary Management division.
Mike Faulkner, CEO of River and Mercantile, said:
We continue to deliver positive investment outcomes for clients across the Group, with all strategies outperforming on an absolute and relative basis. Whilst mandated AUM/NUM increased by 2%, fee earning AUM/NUM in the quarter was lower as it included the restructuring of certain structured equity transactions which have delivered the expected equity return profile to investors.
We have always indicated that inflows and outflows from institutional clients will not be smooth across quarters as each mandate is often larger in size. Despite the markets at their current levels and with material uncertainties faced by investors we continue to see significant interest in this form of active equity risk management and synthetic structured equity solutions.
Our pipeline of mandates continues to be strong and we remain well positioned to deliver on our stated strategy of growth.
Assets Under Management (AUM) and Notional Under Management (NUM)
AUM/NUM for the three months ended 30 September 2017.
£'m | Fiduciary Management | Derivative Solutions | Wholesale | Institutional | Total | Total AUM/NUM | |||||
(AUM) | (NUM) | (AUM) | (AUM) | (AUM) | |||||||
Opening fee earning AUM/NUM | 10,528 | 16,888 | 1,821 | 1,812 | 3,633 | 31,049 | |||||
Sales | 55 | 562 | 192 | 93 | 285 | 902 | |||||
Redemptions | (152) | (1,354) | (76) | (6) | (82) | (1,588) | |||||
(97) | (792) | 116 | 87 | 203 | (686) | ||||||
Net rebalance | - | 176 | - | - | - | 176 | |||||
Net flow | (97) | (616) | 116 | 87 | 203 | (510) | |||||
Investment performance | 57 | - | 107 | 89 | 196 | 253 | |||||
Fee earning AUM/NUM | 10,488 | 16,272 | 2,044 | 1,988 | 4,032 | 30,792 | |||||
Mandates in transition (30 September 2017) | 30 | 75 | - | 260 | 260 | 365 | |||||
Redemptions in transition (30 September 2017) | - | - | - | - | - | - | |||||
Mandated AUM/NUM | 10,518 | 16,347 | 2,044 | 2,248 | 4,292 | 31,157 | |||||
Increase/(decrease) in fee earning assets | (0%) | (4%) | 12% | 10% | 11% | (1%) | |||||
Increase/(decrease) in mandated assets | (0%) | 0% | 12% | 24% | 18% | 2% |
Not included in mandates in transition, is AUA under the Credit Suisse ILC Cooperation Agreement of £280 million as at 30 September 2017, which is expected to transition to AUM in December 2017.
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 and operates through four divisions: Investment Solutions encompassing both advisory and fiduciary management, Derivative Solutions providing structured equity and Liability Driven Investing (LDI), Equity Solutions providing UK and global equity strategies and Multi Asset Solutions, providing dynamic asset allocation and other multi asset based solutions.
The Group has £31bn under management, including £16bn of derivatives, and advises on more than £27bn of assets.
For further information please contact:
River & Mercantile Group PLC +44 (0)20 3327 5100
Kevin Hayes, Chief Financial Officer
Chris Rutt, Deputy Chief Financial Officer and Investor Relations
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.
Notional Under Management (NUM) represents the aggregate notional of derivative contracts and is the basis on which management fees are charged.
Net rebalance in the Derivative Solutions division 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.
Fee Earning AUM/NUM represents amounts on which management fees and performance fees are charged.
Mandates in Transition represent the AUM/NUM of mandates which have been awarded by clients at the period-end date and will transition into fee earning assets. The timing, and ultimate amount transitioned is determined by the client. We report an estimated AUM/NUM for those mandates where there is a high likelihood of the amount being transitioned within the next three months.
Redemptions in transition are redemptions which have been notified by the client at the period-end date, but where the AUM/NUM is included in fee earning assets at period end. We report an estimated AUM/NUM for those mandates where there is a high likelihood of the amount being redeemed within the next three months.