Asset managers seem to be riding a wave of decent results in recent times and Jupiter Fund Management (JUP) has just upped the ante. Its results for the first quarter of the year show that it has increased its assets under management (AUM) by 7.4% to £43.5bn.
The jump is largely due to inflows into its mutual funds, which contributed £1.4bn for the quarter. The flows into Jupiter’s mutual funds exceed analyst expectations and represent a quarterly record for the group.
First quarter flows make up more than half of Liberum’s forecast for the whole year. No wonder Liberum analysts believe their estimate is ‘well underpinned’. But the broker is reluctant to raise its own expectations given the inherent ‘volatility’ of inflows quarter-on-quarter. Jupiter does, after all, still have most of its fiscal year yet to run. Liberum sits alongside most analysts with a ‘buy’ rating on the shares.
Diversification
On releasing its results this morning, Jupiter’s share price is up by almost 2% to 473.8p. Maarten Slendebroek, Jupiter’s chief executive, attributes the success to the firm’s diverse range of products. The company notes ‘significant flows’ into its fixed income, absolute return, multi-asset and global emerging market strategies. Jupiter is also diversified by region, having recently opened offices in Italy and Spain.
For a firm with a market cap of over £2bn it can be hard to maintain growth when managers reach such a level. Analyst Numis has taken the Q1 increase and extrapolated an annualised growth rate of 12.8% for Jupiter itself.
For investors, as the company has exceeded expectations in the higher margin parts of the business, earnings and dividend payments have been revised upwards. It is trading at a price to earnings of 13.7 times, in line with the median of peers. It also has a healthy dividend yield of around 6%.
But with all asset managers there are risks, strategies that produced a good performance earlier this year may turn negative later. Investor sentiment might change and regulatory challenges are a constant worry in this sector. But Jupiter is diverse and is performing well and if it can keep this pace up may well have a great year.
