REG - Jupiter Fund Mgmt - Trading Update and Notice of Results

Jupiter Fund ManagementAnnouncement

17/10/2023 07:00

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RNS Number : 2951Q  Jupiter Fund Management PLC  17 October 2023

Jupiter Fund Management plc

 Trading Update and Notice of Results

 

 

17 October 2023

 

Jupiter Fund Management plc ("Jupiter", the "Group") today issues its trading
update in respect of the three months to 30 September 2023.

 

Key points

 * Despite the ongoing macro-economic uncertainty weighing on retail demand,
overall flows year to date remain within expectations

 * Assets under management (AUM) finished the period at £50.8bn

 * We are continuing to deliver against our strategic objectives, with
investments in our clients, our people and our technology infrastructure

 

Trading update

Macro-economic uncertainty continued to weigh on investor demand for risk
assets through the third quarter, particularly with retail clients.

 

Overall, we saw net outflows since the start of the year of £1.0bn, all of
which came through in the third quarter. Flows from Institutional clients were
marginally positive in the third quarter, bringing the total year to date net
flows to £1.7bn. The retail, wholesale and investment trust channel saw net
outflows of £1.0bn over the three months. AUM finished the period at
£50.8bn.

 

Assets from Institutional clients grew to £9.8bn. Net flows were positive for
the fifth consecutive quarter, albeit marginally. We have previously stated
that the profile of fundings from Institutional clients would not be linear
and that we would not expect to see significant mandates funding through each
discrete reporting period. However, our late-stage institutional pipeline
remains strong and we are confident that we will see further mandates funding
over subsequent reporting periods.

 

There were outflows from Retail and Wholesale clients in the third quarter of
£1.0bn, broadly consistent with both the first half of 2023 and wider market
trends. The areas of client demand remained relatively unchanged from the
first half, with inflows into Asian Income and Japanese Equities not enough to
offset outflows from unconstrained fixed income and UK and European equities.

 

Despite the challenging macro-economic backdrop and ongoing market
uncertainty, we remain confident in our previously stated expectations of
'modest outflows' for the full year.

 

     £bn                                            AUM at         Q3 2023     Q3 2023          AUM at

                                                    30 June 2023   net flows   market returns   30 September 2023
     Retail, wholesale & investment trusts          42.1           (1.0)       (0.1)            41.0
     Institutional                                  9.3            -           0.5              9.8
     Total                                          51.4           (1.0)       0.4              50.8
     of which is invested in mutual funds           38.1           (1.1)       0.1              37.1

 

Matthew Beesley, Chief Executive Officer, commented:

"Despite the challenging market environment, we expect our financial
performance for the current year to be in line with expectations. During my
first year as CEO, we have continued to make progress against our previously
stated strategic objectives and I believe the continued investment in our
clients, our technology and our people will deliver long-term value.

 

The future of the asset management industry will not be through the
traditional model of simply 'distributing' products, but in forming deeper
relationships with our clients. We have rationalised our fund range and
right-sized the business and are investing to ensure the company is aligned
with clients' requirements which are fundamentally changing. Whilst progress
will not be linear, the growth of our institutional and international
businesses are encouraging indications of our ability to increase scale and
grow our appeal to a broader range of clients".

 

 

Continued strategic progress

At our full year 2022 results in February, we announced our strategy for
delivering growth, focused on the four key strategic objectives of increasing
scale, decreasing undue complexity, broadening our appeal to clients and
deepening relationships with all our stakeholders. We continue to make good
progress against each of these, including growing our institutional business,
rationalising the fund range, developing new products and restructuring the
operating model. Today we are announcing further actions consistent with these
objectives which will help us to position the business for future growth
through investments in our clients, in our technology, and in our people.

 

We have restructured our client-facing teams to better align with evolving
client needs and to increase scale in key growth areas, such as institutional
and international. Through engaging with an increasingly sophisticated client
base, this newly-formed client group will move beyond a 'product-focused'
mindset and consider alternative methods for clients to access our investment
capabilities. Technology and increased automation will play a crucial role in
this, reducing the undue complexity of manual processes, and we are investing
in our content and data capabilities to improve both our client delivery and
experience.

 

In order to reduce complexity and to broaden our appeal to clients, we have
focused through the last year on carefully and strategically curating our
product offering through the fund rationalisation programme, which is now
almost complete, and the range of thematic funds, which will be launched
shortly. Consistent with this strategic approach, we have also been reviewing
our pricing structures to ensure that we are competitively positioned. In line
with our commitment in this year's Assessment of Value report, we are
implementing a tiered fee structure for clients investing in our UK Unit Trust
and OEIC ranges. This will create better alignment between Jupiter and our
clients and allow them to benefit from economies of scale as a fund's assets
grow.

 

The new model will be implemented from early 2024 with basis point discounts
taking effect as a fund reaches various levels of assets under management. The
first threshold will be when a fund reaches £500m of assets, at which point a
2 basis point discount will be applied. Although we cannot forecast client
flows and business mix, at our current AUM this would result in an additional
decline in the overall net revenue margin through 2024 of between 1.5 bps and
2 bps.

 

In addition to investing in our clients and in our technology infrastructure,
we are also investing in our people. In today's competitive market
environment, we have worked hard to ensure our talented investment
professionals are remunerated appropriately, based around performance criteria
that ensures interests are aligned between Jupiter, our people and our
clients. Our thoughtful and competitive retention policies are designed to
support the growth of the firm in key strategic areas.

 

If the performance criteria are reached, and assuming that there is no
material market recovery, this will have an impact on our total compensation
ratio.  Depending on market conditions, we can reasonably expect the
compensation ratio to be within a range of mid to high '40%'s through 2024,
which we believe is in line with observable trends across the peer group.

Positioned for growth

As we manage the business in line with our four strategic objectives, key
management actions have provided us with the space to invest across the
business, in our clients, our people and our technology infrastructure. Our
business is evolving to become a more attractive place for clients to form
deep, long-term relationships and to share in economies of scale.

 

We are seeing momentum in key areas of strategic importance and we will seek
to build on that, controlling those factors we can control and investing in
the growth of the business to deliver long-term shareholder value.

Analyst presentation

There will be a short virtual analyst presentation at 09:00 BST on 17 October
2023. The presentation will be accessible via a live webcast, which will be
available at: https://secure.emincote.com/client/jupiter/jfm036.
(https://secure.emincote.com/client/jupiter/jfm036)

Please note that questions can be asked via the webcast.

 

 

Notice of results

Jupiter will be issuing full year results for the year to 31 December 2023 on
23 February 2024 and will host an analyst presentation to discuss the results.

 

 For further information please contact:

                       Investors             Media
 Jupiter               Alex James            Olivia O'Connor

                       +44 (0)20 3817 1636   +44 (0)20 3817 1436

 Edelman Smithfield    Latika Shah           Andrew Wilde

                       +44 (0)7950 671 948   +44 (0)7786 022 022

 

 

 

LEI Number: 5493003DJ1G01IMQ7S28

 

Forward-looking statements

 

This announcement contains forward-looking statements with respect to the
financial condition, results of operations and businesses of the Group. Such
statements and forecasts involve risk and uncertainty because they relate to
events and depend upon circumstances in the future. There are a number of
factors that could cause actual results or developments to differ materially
from those expressed or implied by forward-looking statements and forecasts.
Forward-looking statements and forecasts are based on the Directors' current
view and information known to them at the date of this announcement. The
Directors do not make any undertaking to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise. Nothing in this announcement should be construed as a profit
forecast.

 Historic quarterly net flows and AUM

 

 

     Flows and AUM by quarter
                                                Q1 2022  Q2 2022                         Q3 2022                        Q4 2022  Q1 2023  Q2 2023  Q3 2023  Q4 2023

                                                £bn      £bn                             £bn                            £bn      £bn      £bn      £bn      £bn
     Total
     Opening AUM                                60.5                55.3                            48.8                47.4     50.2     50.8     51.4
     Gross inflows                              3.8                   3.1                             3.8               4.4      3.2      4.5      2.4
     Gross outflows                             (5.4)               (5.1)                           (4.4)               (3.7)    (4.1)    (3.6)    (3.4)
     Net flows                                  (1.6)               (2.0)                           (0.6)               0.7      (0.9)    0.9      (1.0)
     Market returns                             (3.6)               (4.5)                           (0.8)               2.1      1.5      (0.3)    0.4
     Closing AUM                                55.3                48.8                            47.4                50.2     50.8     51.4     50.8

     Retail, wholesale & Investment trusts
     Opening AUM                                55.4       50.2                                     44.0                42.3     43.4     43.5     42.1
     Gross inflows                              3.4                   2.8                             2.8               2.9      2.8      2.7      2.1
     Gross outflows                             (5.2)               (4.8)                           (3.9)               (3.5)    (3.8)    (3.4)    (3.1)
     Net flows                                  (1.8)               (2.0)                           (1.1)               (0.6)    (1.0)    (0.7)    (1.0)
     Market returns                             (3.4)               (4.2)                           (0.6)               1.7      1.1      (0.7)    (0.1)
     Closing AUM                                50.2                44.0                            42.3                43.4     43.5     42.1     41.0

     Institutional
     Opening AUM                                5.1                  5.1                            4.8                 5.1      6.8      7.3      9.3
     Gross inflows                              0.4                  0.3                            1.0                 1.6      0.4      1.8      0.3
     Gross outflows                             (0.2)              (0.3)                          (0.5)                 (0.3)    (0.3)    (0.2)    (0.3)
     Net flows                                  0.2                     -                           0.5                 1.3      0.1      1.6      -
     Market returns                             (0.2)              (0.3)                          (0.2)                 0.4      0.4      0.4      0.5
     Closing AUM                                5.1                  4.8                            5.1                 6.8      7.3      9.3      9.8

 

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