Liontrust Asset Management’s gross profits and assets under management and advice (AUMA) have both fallen following a “challenging period”.
The company’s half year report for the six months to 30 September 2023 showed gross profits decreased by 9% to £98.6m compared to the same period last year (£108m).
Meanwhile, its AUMA decreased by 12% to £27.7bn and net outflows came in at £3.2bn – up from £2.2bn in 2022.
Adjusted profit before tax was £36m compared to £42.9m in 2022 – a decrease of 16%.
Additionally, adjusted diluted earnings per share was 42.32 pence, compared to 53.87 pence per share in 2022 – a drop of 21%.
Liontrust chief executive John Ions described it as a “challenging period” for the asset management sector as a whole.
He said: “This is shown by the fact that the industry experienced net retail outflows in the UK in September of £1.4bn, according to the Investment Association (IA), and asset managers only required net retail sales of £7.4m in the UK in the 3rd quarter of 2023 to make it into the top 10 list of sellers according to the the Pridham Report.
“It is in this context that we need to view Liontrust’s net outflows and the impairment of recent acquisitions.
“The majority of Liontrust’s assets are invested in UK equities, which is an asset class that continues to be out of favour with investors.”
Ions added that UK All Companies was the worst selling sector for net retail sales yet again in September 2023, with net retail outflows of £884m.
This, he said, has been the case for 10 out of the past 11 months.
He added: “The impairment of recent acquisitions, which does not affect our net cash, reflects the sentiment towards UK equities, especially among institutional investors, which has negatively impacted the funds and mandates we inherited from the acquisition of Majedie Asset Management.
“Liontrust has partly grown through acquisitions and they have made it a better business by broadening the pool of talent, and enhancing product development and the infrastructure of the business, including client service.
“Our focus is clear and we are committed to navigating the current headwinds and emerging with the business stronger than ever. There are a number of areas we are prioritising to achieve our strategic objectives.
“We are seeking to further broaden our investment talent and product offering, which follows an optimisation of the current fund range.”
Ions said Liontrust has closed and merged a number of funds, launched the GF Sustainable Future US Growth Fund and will offer an Irish-domiciled version of the European Dynamic Fund in the first quarter of 2024.
Panmure Gordon, an investment bank based in the UK, added: “There has been no doubting how tough the environment has been in the UK funds market and for UK equity strategies in particular.
“IA data shows that the three UK sectors have seen aggregate outflows of £11bn in the first nine months of 2023,£30bn of outflows in the last three years and no month in inflows since July 2021.
“Liontrust has not, and could not have, been immune but has fought the tide much longer than most.”
On 24th August, Liontrust failed to reach the 66.6% of GAM shareholders’ approval for the acquisition of GAM, however, this news resulted in a 10% increase in its share price on the day.
In a note Peel Hunt, a specialist UK investment bank, said Liontrust had failed to reach the 66.6% of GAM shareholders’ approval for the deal to go ahead.
Liontrust only secured 33.3% of GAM shareholders’ approval.
However, Peel Hunt said “the failed tender offer for GAM de-risks the Liontrust investment case” and that Liontrust’s share price had already been “significantly impacted” due to fears of taking over GAM.
Peel Hunt predicted Liontrust shares would now “rally” after this news.
