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NZ boutique fund manager profits declined over the most recent financial year with Fisher Funds and Milford Asset Management both booking zero performance fees in symptomatic annual results.
Fisher, in particular, took a big hit to the bottom line as difficult market conditions erased performance fees while the manager embarked on a costly acquisition of rival, Kiwi Wealth.
According to the Fisher annual report for the 12 months to March 31, revenue for the Takapuna-based firm dropped to $136 million from almost $195 million in the previous year while expenses surged to $96 million ($63.8 million in 2022).
While management fees (which included partial contributions from recent buys Aon KiwiSaver and Kiwi Wealth) rose to more than $137 million compared to $120 million last year, Fisher performance fees fell to zero from $77 million in the previous annual period: the manager removed performance fees from its KiwiSaver and some other retail funds earlier this year but that will impact the 2024 accounts.
The business saw expenses spike higher across the board during the financial year with employee costs increasing to $41.4 million ($31.1 million in 2022). Fisher, headed by Bruce McLachlan, paid $310 million to buy Kiwi Wealth last year but the deal added a further $7 million in acquisition costs in the year with more likely in the current financial year.
But as Fisher saw its net profit slump to about $25.7 million from $93.9 million, fellow marquee NZ boutique, Milford, reported a relatively minor dent to margins despite also missing out on performance fees ($26.4 million last year).
Milford accrued almost $156.5 million in management fees over the latest 12-month period, up from $147.5 million in the 2022 year, and a further $1.1 million in interest.
The Auckland-headquartered manager held most expense lines steady year-on-year, albeit knocking off close to $16 million in ‘management service fees’ paid to the parent company.
Milford Funds (the reporting entity) shuffled $126.7 million to the parent business during the 12 months to March 31, 2023, compared to $142.5 million in the previous year: the corporate sleight-of-hand shields many operating expenses – notably employee costs – from view.
Elsewhere, Devon Funds also saw year-on-year profits fall to $2.9 million from $4 million in 2022 while NZ Funds reported net income after tax of $753,000 against $2.7 million last year.
Revenue-wise, Devon dropped to $8.2 million in the 2023 period from $10.4 million 12 months previously; by contrast, NZ Funds raked in $33.7 million in the most recent period ($36.1 million last year) as expenses increased to about $33.3 million (including $18.7 million of employee costs) from $32.3 million in 2022.
Harbour Asset Management, which reported earlier this year for the 12 months to the end of 2022, booked a profit of $476,000 for the period versus almost $1.2 million in 2021 on steady top-line revenue of more than $21 million.
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