Both of the biggest (mostly) NZ-owned managers have reported bumper revenue in the 12 months to March 31, buoyed by strong fund flows and, mostly, supportive markets.
While the March 31 balance date followed just a week after the low point of the COVID-19 market crash, Fisher Funds and Milford reported revenue growth and solid profits for the 12-month period.
Of the two firms, Milford – now boasting $9 billion plus under management – booked the better fee income growth of more than $20 million year-on-year for total revenue of almost $96 million.
By contrast, the $9.5 billion Fisher saw more modest annual fee income growth (just over $2 million for the year) but higher overall revenue of about $108 million.
Fisher reported a fall in profit over the 12 months to just under $60 million before tax against almost $67 million over the 2019/20 period as operating expenses rose from $34 million to more than $42 million: after-tax the TSB Community Trust majority-owned business banked a profit of $42.1 million ($48 million last year).
Meanwhile, Milford, which reports via the Milford Funds entity, saw pre-tax profits rise from $7.3 million last year to $9.5 million for the 12 months to March 31, 2020 (for respective after-tax figures of $5.4 million and $6.9 million).
The Fisher and Milford Funds profit figures are not directly comparable, however, as the latter entity passes on much of the revenue to Milford Asset Management as ‘management service fees’ (of almost $77.6 million this year and $59 million in 2019/20).
For the first time in many years, too, Milford Funds declined to pay a dividend, which in 2019/20 amounted to $10 million, suggesting a note of caution, or perhaps signaling further investment in growth ahead.
The Auckland-based firm, now headed by Mark Ryland, reported strong growth in base management fees this year (up to $73.5 million from $55.8 million in the previous period) as performance fees increased less than $4 million to hit just above $21 million in the latest report.
At the same time, Fisher saw performance fees fall to about $17.6 million from $25.8 million last year while base management fees jumped from $74.7 million to $85.2 million year-on-year. Fisher, headed by Bruce McLachlan, also reported administration fees steady at close to $8.5 million ($8.3 million last year).
As well as higher employee expenses (climbing about $4 million to reach above $23 million during the year), Fisher also added close to $1 million in commission expenses (now almost $5 million) and $2 million in ‘other’ costs during the 2019/20 period.
The company distributes products via TSB, the Co-op Bank and several credit unions.
US private equity concern TA Associates owns one-third of the Takapuna-headquartered Fisher, while TSB Community Trust entities hold the remaining shares.
Milford Funds is wholly owned by Milford Asset Management, which has 42 shareholders, many of whom are staff, on its register.