■ Cumulative net inflows reach £689m
■ Positive investment performance
■ Retail investors regain appetite for equities
Jupiter Fund Management (JUP) boosted funds under management in the third quarter to £29.9bn, up £844m, or 3 per cent, compared with the second quarter, the fund manager has confirmed. Even more impressive is news that the gain from a year earlier was a colossal £4.9bn.
Crucially, there was a £271m net inflow of funds, taking the cumulative total for the first nine months of the year to £689m, with demand for mutual funds providing most of the inflow during the quarter and £704m for the nine-month period. On top of this, there was also a positive investment performance of £573m in the quarter, better than some had expected.
Mutual fund inflows were spread across fixed-income funds such as Strategic Bond and Dynamic Bond, along with equity funds such as UK Special Situations, and European. And of the £29.9bn under management, mutual funds now make up £23.3bn, or 78 per cent of the total. The only net outflow was in segregated mandates, but even there a third-quarter outflow of £28m was more than offset by a positive market movement of £137m.
JPMorgan Cazenove says...
Overweight. We are making a modest increase to our estimates, thanks to higher than expected assets under management and signs of a more positive market environment. So, adjusted pre-tax profits estimates for 2013 go up from £108m to £109m and EPS from 24.6p to 24.7p. Our recommendation is based on the combination of relatively high profitability, consistently good investment performance, which leads to strong client inflows, and a strengthening balance sheet. And while the share price is up a third this year, we feel the financial performance justifies this, and raise our target price from 377p to 392p.
RBC Capital Markets says...
Outperform. We believe our second-half net inflows estimate of £500m is achievable, given that Jupiter has achieved half of that in the third quarter. And while the third-quarter investment performance was slightly disappointing when compared with a 4 per cent increase in the FTSE 100 index, we believe the current better trend in equities makes our £1.7bn target for the second half achievable, too. Jupiter trades at 14.1 times full-year cash adjusted EPS forecasts and 12.6 times for 2014, a slight premium to the sector. This is typical and, we think, justified by the company's above-average cash profit margin.
