Financial

Perpetual Investments generated revenue of $227.9 million in FY16, $12.1 million or 5% lower than FY15. The key factor that reduced revenue in FY16 was lower average FUM, as a result of prior period distributions (30 June 2015) and a lower average level of the All Ords which decreased by 6% on FY15. Higher performance-related fees in FY16 and good cost control positively offset this.

The average FUM in FY16 was $30 billion, 7% lower than in FY15.

Average FUM revenue margins in FY16 were 75 basis points (bps), 1 bps higher than in FY15. Excluding higher performance fees in FY16, underlying average margins were relatively stable on FY15. 

In FY16 total expenses for Perpetual Investments, comprising operating expenses, depreciation, amortisation and equity remuneration, of $109.8 million, were $4.6 million lower than in FY15. The decrease in expenses was primarily due to lower variable remuneration, savings associated with the in-house manufacturing of the global equities fund in FY15, and one-off launch costs for the initial public offering of Perpetual Equity Investment Company Limited incurred in FY15.

Focus

Under Perpetual’s Lead & Grow strategy, Perpetual Investments will focus on growth in contemporary strategies where there has been strong client demand and where there is excellent capability – including global equities, multi-asset strategies and credit and fixed income. 

The consistent delivery of investment performance for clients is paramount in Perpetual Investments. At 30 June 2016, 93% of Perpetual’s flagship funds were in the top or second quartile over five years, and over a 10 year performance horizon 83% are first or second quartile.

Delivery

Perpetual Investments is seeing solid progress on its strategy. Perpetual remains strong in its core business of Australian equities, with more room for growth. Through Lead & Grow, Perpetual Investments has delivered more contemporary offers to the market through Perpetual’s multi-asset, credit and fixed income, and global equities capabilities. 

The Perpetual Diversified Real Return Fund had positive net flows and exceeded its targeted return of CPI +5%p.a. The fund is top quartile. Perpetual also has an established and well-respected team on track to deliver substantial opportunities in multi-asset.

Perpetual is confident in its diversification into global equities and Perpetual has achieved top quartile performance over 3 and 5 year periods and been included on 15 platforms. 

Contemporary fixed income and credit strategies continue to deliver strong returns with the Active Fixed Interest Fund having top quartile performance over 1, 3, 5 and 10 years. Perpetual’s Pure Credit Alpha Fund is generating rolling 3-year outperformance of +3 to +5%.