Shares in asset manager Miton (MGR:47p) have drifted since I last suggested buying them at the time of the annual results (‘Alpha alert for financial gains’, 18 March 2019), albeit the board has paid out a 2018 final dividend of 2p a share to take the running total to 5.67p a share after I first suggested buying the shares at 23p ('Poised for a profitable recovery', 4 April 2015).
The company’s pre-close first-half trading update revealed that assets under management (AUM) have risen by 8 per cent to £4.72bn since the start of 2019. Average AUM of £4.6bn was 11.5 per cent higher than during the same six-month period of 2018. This reflects positive market movements of £430m, which offset net outflows of £82m, the latter being a reflection of investor caution about the UK equity market. That said, the fund manager continues to diversify its revenue streams and its 16 funds include differentiated strategies to meet clients' needs, such as the LF Miton US Smaller Companies Fund and the LF Miton UK Balanced Fund.
Also, I am maintaining the investment thesis that I outlined at the start of the year (‘Profit from unwinding of recessionary risk’, 21 January 2019), so I expect a further unwinding of the risk factors that had been subduing equity valuations last autumn to support the ongoing recovery in global stock markets. In light of this, and the fact that the company has overseas exposure through several funds – Miton US Opportunities Fund increased AUM by almost two-thirds to £626m in 2018 and was the second-best performer in the IA US Smaller Companies sector since inception – then I expect Miton to be able to achieve the year-end AUM target of £5bn embedded in the financial forecasts of analyst Stuart Duncan at house broker Peel Hunt.