Funds inflow underpins Fisher Funds' earnings

Fisher Funds Management lifted funds under management by 10% to $6.6 billion in 2015, helping underpin earnings in a year when investment returns resulted in smaller performance fees.

Fee income fell to about $61 million from $63.7 million a year earlier, the company says.

The management fee component rose about 10% to $51 million, while performance fees fell 54% to $5.5 million. Administration and other fees rose 47% to $4.6 million.

Profit for the year rose 42% to $22.4 million, mainly reflecting reduced amortisation of the value of management rights to funds acquired from Tower in 2013, a reduction in employee benefits, and lower finance costs and operating expenses.

Fisher Funds' $79 million acquisition of Tower Investments in 2013 was transformational, lifting FUM to about $5.5 billion that year from $1.44 billion. It followed the acquisition of the KiwiSaver portfolios of First NZ Capital, Huljich Wealth Management and the New Zealand Association of Credit Unions.

Fisher Funds declared four fully imputed dividend payments of $264.29 per share over the year, amounting to $16 million, up from $7 million a year earlier.

Managing director and shareholder Carmel Fisher says funds growth in the latest year was driven by investment returns and retail client inflows.

On the reduction in employee benefits, she says staff numbers didn't change dramatically over the year, although there were "some administration, advice and client service roles that were vacant for periods and yes, bonuses were lower due to investment returns for clients not being as strong as the previous year."

Carmel and Hugh Fisher own about 32% of the fund manager, while TSB Bank owns 26% and Woodward Capital holds about 18%. Other shareholders include chief investment officer Mark Brighouse, with 0.4%, director Frank Jasper, who shares a 6.6% stake, portfolio manager Mark Brown with 1%, and Rob Morrison of Wellington-based investment bank HRL Morrison & Co, who has a 3.4% holding with his late brother Lloyd Morrison.

Ms Fisher says the firm's clients "are engaging more with us, partly as a result of their KiwiSaver balances growing, but also because they are more aware and interested in who their provider is and what makes us different than others."

"We judge our performance in terms of our clients' expectations and our own expectations, and in that regard, I think we're in great shape," she says.

Financial markets have been more volatile than usual in recent months "and I think it has been a bit of a rude awakening for some because investors have become accustomed to relatively calm investment waters over the last few years. Discipline and a consistent approach to investment decision-making becomes even more important when markets are volatile, and at times like this, it is even more critical to ignore the headlines and noise we are bombarded with each day."

(BusinessDesk)