Perpetual Limited Navigates Currency Gains Amid Net Outflows to Lift AUM 3.6%
Perpetual Limited's Q2 FY25 update reveals a 3.6% rise in Assets Under Management to A$230.2 billion, buoyed by currency tailwinds despite net outflows and market headwinds. Corporate Trust and Wealth Management also posted modest growth, setting the stage for the upcoming half-year results.
- Assets Under Management (AUM) increased 3.6% to A$230.2 billion
- Positive currency movements added A$15.8 billion to AUM
- Net outflows of A$3.8 billion and negative market impacts of A$4.1 billion
- Corporate Trust Funds Under Administration (FUA) grew 2.5%, Wealth Management FUA up 1%
- Performance fees expected to rise significantly to approximately A$15.9 million in 1H25
Mixed Quarter for Asset Management Amid Currency Strength
Perpetual Limited (ASX: PPT) reported a 3.6% increase in Assets Under Management (AUM) to A$230.2 billion for the second quarter of FY25, driven primarily by favourable currency movements. Despite this headline growth, the business faced challenges from net outflows totalling A$3.8 billion and negative market movements amounting to A$4.1 billion during the quarter ended 31 December 2024.
CEO Bernard Reilly highlighted the mixed performance across Perpetual’s boutique asset managers. Barrow Hanley led gains with an 8.4% AUM increase, largely due to currency effects, while JO Hambro Capital Management and Pendal Asset Management experienced declines, reflecting net outflows and market pressures. Notably, JO Hambro’s Global Select Strategy outperformed its benchmark over the past year, signaling pockets of resilience within the portfolio.
Corporate Trust and Wealth Management Show Steady Growth
Beyond asset management, Perpetual’s Corporate Trust division reported solid growth in Funds Under Administration (FUA), rising 2.5% to A$1.25 trillion. This was supported by expansion in Debt Market Services and Managed Funds Services, with new clients attracted to Perpetual Digital’s data reporting services.
Wealth Management also posted a modest 1% increase in FUA to A$20.6 billion, underpinned by positive market movements. Net flows remained flat, reflecting a cautious investor environment but steady client engagement.
Performance Fees and Expense Outlook
Perpetual anticipates recognising approximately A$15.9 million in performance fees for the half year to December 2024, a substantial increase from A$5.4 million in the prior corresponding period. The bulk of these fees are attributed to JO Hambro strategies, reflecting improved investment performance.
On the cost front, the company expects expense growth to remain within the previously guided 2-4% range for 1H25, likely at the upper end, driven by currency effects and higher variable remuneration linked to performance fees. The cost-to-income ratio is expected to stay relatively stable compared to 1H24.
Ongoing Engagement with KKR and Forward Outlook
Perpetual continues constructive discussions with KKR regarding the proposed Scheme of Arrangement announced in December 2024. The company reaffirmed its commitment to keeping the market informed in line with continuous disclosure obligations.
Investors will be closely watching the upcoming half-year financial results scheduled for 27 February 2025, which will provide further clarity on how these dynamics translate into profitability and strategic positioning amid a complex global investment landscape.
Bottom Line?
Perpetual’s currency-driven AUM growth masks underlying outflows, setting a cautious tone ahead of half-year results.
Questions in the middle?
- Will net outflows persist or reverse in the coming quarters amid market volatility?
- How will performance fee growth impact overall profitability and remuneration expenses?
- What progress is being made in the Scheme of Arrangement discussions with KKR?
