Geoff Lloyd’s Perpetual cashed up, looking for bargains
Perpetual chief Geoff Lloyd is hoping for a correction in the sharemarket so the fund manager can snap up bargains.
Perpetual chief executive Geoff Lloyd is hoping for more volatility and a correction in the sharemarket so the fund manager can lighten its cash holdings in favour of value opportunities.
“We hope the market’s headed for a correction to value and I think fiscal 2018 will be uncertain and unpredictable ... we would hope volatility would increase,” Mr Lloyd told The Australian.
“Obviously as an active value manager it’s been a challenging three years. But we’ve been a value manager for over 50 years and we’re very committed to that investment philosophy. We’re sitting on large pools of cash in the portfolio.”
While Perpetual struggles to halt outflows in its funds management business, its diversification strategy appears to be paying off. Forty per cent of its profit before tax for the 2016 financial year came from its wealth and trustee arms.
“As we are nearing capacity in our leading Aussie equities business within Perpetual Investments, we have continued to invest into Perpetual Private and Perpetual Corporate Trust. This diversification makes us much better positioned for growth in the future,” Mr Lloyd said.
Growth in the funds management business is billed to come from its global equities capability.
“It’s about growing out our global offering and our multi assets and credit fixed-income offerings. Particularly our global offering now has a one, three and five-year performance track record and it’s performance that counts. It’s now got a long-term track record,” he told The Australian.
For the year to June 30, Perpetual booked a 4 per cent rise in net profit to $137.3 million, beating analyst expectations, while revenue also rose 4 per cent, to $515.4m.
Funds under management rose to $31.4 billion at the end of the year, while the average over the year was slightly higher at $31.5bn.
Net outflows hit $900m over the year, compared with outflows of $300m a year earlier, and were primarily from the institutional channel, Mr Lloyd said.
Perpetual Investments, the funds management arm, posted a pre-tax profit of $116.5m, down 1 per cent on last year, largely driven by lower performance fees and partially offset by higher average funds under management.
The group’s financial advice arm saw profit before tax lift 18 per cent in the year, to $40.5m, on the back of new client growth. Its corporate trustee business booked an 8 per cent lift in profit before tax.
Commenting on superannuation, Mr Lloyd said the contribution cap rules had not significantly affected clients, but the government needed to stop tinkering with super. “I don’t think the government is finished tinkering but I hope they realise the significance of tinkering on an ongoing basis,” he said.
“It’s not just over a short period. For me it’s been over 10 years of this, so it’s important to have a very well-structured, governed and regulated environment to allow Australians to have more certainty on their super and engage and connect with it.”
Perpetual pays a final dividend of $1.35 a share for a full-year payout of $2.65 a share, fully franked.
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