Given the tumult in emerging markets over recent months, City of London Investment Group’s (CLIG) decision to diversify away from such investments looks like a prudent move. The core emerging markets strategies suffered $215m (£164m) in net outflows during the year to June, as clients rebalanced their portfolios. What’s more, those strategies also underperformed their benchmarks, due to poor net asset value performance and widening discounts for the underlying closed-ended funds in which the group invests.
Nevertheless, funds under management rose 10 per cent to $5.1bn, boosting net fee income by 9 per cent to £31.6m. The operating margin dipped to 0.8 per cent, from 0.86 per cent, reflecting lower fees from diversification products and a change in emerging markets fee structure.
Those diversification strategies gained $400m in net inflows, with developed market products accounting for more than half of new business. And they also now account for more than a fifth of overall funds under management, up from 18 per cent in the prior year. Chief executive and founder Barry Olliff – who announced his intention to step down alongside these results – wants to push this further, with plans to establish an emerging market Reit fund.
House broker Zeus Capital expects adjusted pre-tax profit of £13.5m during the year to June 2019, giving EPS of 40.4p (from £12.8m and 39.3p in 2018).
| CITY OF LONDON INVESTMENT GROUP (CLIG) | ||||
| ORD PRICE: | 412p | MARKET VALUE: | £110m | |
| TOUCH: | 406-419p | 12-MONTH HIGH: | 459p | LOW: 366p |
| DIVIDEND YIELD: | 6.6% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 80p | NET CASH: | £19.7m | |
| Year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014* | 24.2 | 7.4 | 21.1 | 24 |
| 2015 | 25.4 | 8.9 | 26.4 | 24 |
| 2016 | 24.4 | 8.0 | 23.3 | 24 |
| 2017 | 31.3 | 11.6 | 36.9 | 25 |
| 2018 | 33.9 | 12.8 | 39.5 | 27 |
| % change | +8 | +10 | +7 | +8 |
| Ex-div: | 11 Oct | |||
| Payment: | 30 Oct | |||
| *13-month period, restated | ||||
