Fund manager Liontrust has announced a roaring increase in profits in first-half results today, as it confirmed it would absorb costs from new regulation.
Liontrust's profits hit £12m before tax, an increase of 76 per cent year on year. Revenues meanwhile grew 57 per cent to £35m.
Assets under management totalled £9.6bn at the end of September, following the April acquisition of Alliance Trust Investments Limited which added £2.5bn, but this has since broken through the £10bn barrier. Net inflows for the six months up to September totalled £178m.
Liontrust also announced this morning that its interim dividend was up from 4p to 5p.
Why it's interesting
The fund manager's profits exceeded analyst expectations, and the Alliance Trust acquisition went down well with brokers.
“Liontrust’s greater scale and diversification in our view merits further share re-rating over time,” said Keith Baird at Cantor Fitzgerald.
The firm was also the latest to confirm that it would absorb research costs when new regulation, the second Markets in Financial Instruments Directive (Mifid II), comes into force next year. Mifid II makes fund managers pay for analysts' research, rather than receiving it for free as part of the sum paid to brokers, and Liontrust has quantified the cost of this at between £1m and £1.5m.
What Liontrust said
“We have generated these net inflows despite the uncertainty caused by the ongoing Brexit negotiations and the fact UK All Companies [fund sector] has been the worst selling sector by net retail flows in seven of the past 13 months to the end of September 2017, according to the Investment Association,” said chief executive John Ions.
It shows the resilience of investor demand for active fund management with proven long-term track records and robust investment processes despite a challenging environment.