Jupiter Fund Management share price jumps as it rebounds
Jupiter Fund Management saw its share price jump in early morning trading on Thursday as it generated the first net positive inflows since 2017, amid clients improving their investment performance.
The asset manager’s share price rose 8.8 per cent 204.50 pence, gaining 28.6 per cent this year to date, as it continues to rebound from a gloomy 2024.
It generated £1.3bn in net inflows, from outflows of £10.3bn the prior year.
The uptick was mainly led by its Institutional channel which generated £1.0bn of inflows, while its Retail and Wholesale channel brought £0.3bn.
Assets under management (AUM) also increased 19 per cent to £54bn, up from £45.3bn, driven by the inflows and “positive market movements”.
But, average AUM dipped slightly to £48.1bn from £50.7bn, but high performance fees lifted revenue.
Revenue jumped 18 per cent to £431m, with performance fees quadrupling from £31.2m to £120.3m, while tight cost control trimmed administrative expense.
Profit before tax also rose from £88.3m to £131.9m, well ahead of market expectations, with the Board recommending a final ordinary dividend of 2.3 pence per share.
The group also announced a £30m share buyback programme.
Improving investor sentiment
Chief executive, Matthew Beesley, credited the group performance towards a marked improvement in client sentiment, with investors shifting away from large-cap, tech stocks, which made markets “narrow and highly correlated”.
The fund added that it is seeing early signs investors are moving away, and opting to diversify their portfolio with different valuations and asset classes, predicting that if this continue it places asset managers in a good position to capitalise.
This caused both its client channels to see an uptick in gross flows, generating £16.9bn in total.
Beesley said: “With leading indicators improving and momentum building across the business, we have increased confidence in being able to deliver on our targeted 70 per cent cost:income ratio in the medium term.”
It added that its completed acquisition of investment management company CCLA, brings a new client channel, while the “encouraging backdrop” positions the group to “take advantage of opportunities ahead”.
Wonder fund warning
Analysts acknowledged that Jupiter surpassed expectations, particularly in its increase in performance fees but noted that the market does not typically pay attention to capital from this source, due to its volatility.
Panmure Liberum argued that it shows the fund is delivering investment returns, ensures staff retention remains high through paying bonuses and allows it have spare capital to operate its share buyback programme or invest.
But, Rae Maile, analyst at Panmure Liberum, warned of ‘wonder funds’, funds that perform well for a few years then fail to keep momentum.
He said: “It is the latter point which remains arguably most relevant for Jupiter, as the history of “wonder funds” is that past performance is no guarantee of for the future.”