Emerging markets player City of London Investment Group has reported a sharp drop in funds under management (FuM) in its full-year results as it battled Eurozone headwinds and market volatility.
FuM on May 31st were $4.5bn compared to $5.8bn last year, a decline of 23%.
In sterling terms, FuM fell by 18% to £2.9bn (2011: £3.5bn). City of London's benchmark, the MSCI Emerging Markets Index, registered a 20% decline over the whole of the financial year with the major part of the fall occurring in the final quarter.
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Things have worsened since the year's end, with FuM at the end of August at $4.4bn, a fall of 1.7%. This compares to a rise of 5.7% in the benchmark over the same period.
City of London says: "the shortfall reflects net client withdrawals, largely prompted by rebalancing of risk assets by asset allocators, together with marginal underperformance."
Revenues, from the group's management charges, were £34.1m (2011: £36.5 million). Profit before tax came in at £11.5m (2011: £13.1m).
The final dividend has been announced at 16p per share, payable on October 19th, making a total for the year of 24p the same as last year.
Barry Olliff, Chief Executive, said, "The outlook for both our business and the emerging markets at present remains difficult to forecast. Euro problems seem likely to be with us for some time and will not be solved until there is more pain.
"Inevitably the solution will be for the underleveraged or good credits to assist the poor credits on terms that they find mutually acceptable. Meanwhile we will continue to find that we swing around in multiples of 10%, just based upon emotion.
"We will continue to attempt to take advantage of these mood swings and will use these anomalies of mispricing as we have over many years."
At 08:17, the stock had dropped 2.1%.
BS
