At first glance Jupiter Fund Management's interim results appear to offer little to shout about, but with pre-tax profits coming in ahead of analyst exceptions, investors were suitably impressed.
Also giving cause for celebration were mutual fund net inflows, which in the second quarter continued to advance to £210m, taking year-to-date net mutual funds inflows to £265m, driven by the Merlin funds range, Strategic Bond and Global Convertibles funds.
The firm also reported "encouraging" net inflows of £103m for private clients, mainly resulting from two large charity wins.
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However, these positive inflows were offset by the previously announced loss of a £560m lower margin segregated mandate, resulting in overall net outflows of £189m for the quarter and total net outflows for the first half of £302m.
Net revenue for the period was £117.7m, an 8.0% decline on the same period in 2011 of £128.3m, reflecting a 4.0% decrease in net management fees. Assets under management (AUM) dropped from £24.8bn to £23.4bn, as the period saw net outflows of £0.3bn compared to inflows of £0.7bn the same period last year. The net management fee margin dipped one basis point (bp) to 93 bps, or 93/100 of a percentage point.
Net revenue dropped from £128.3m to £117.7m, while pre-tax profit declined from £37.3m to £31.2m year-on-year.
More positively, a debt of £36m at the end of June 2011 turned to cash of £1.0m at the end of the period under review, and the interim dividend was retained at 2.5p per share.
Edward Bonham Carter, Chief Executive, said: "Against a challenging market backdrop, it was encouraging that we saw strong investment performance, positive net mutual fund flows and growth in assets under management over the last six months ... Against this backdrop, Jupiter's mutual fund net inflows of £265m are a good result, with positive contributions from both our UK and international channels.
"Our financial position remains robust with a further repayment of £33m from our bank facility and operating margins remaining above 50%. Although the economic outlook remains uncertain, we believe we are well placed to capitalise on long-term structural drivers and remain confident of delivering value across the cycle.
"The recent concerted action by central banks highlights the continued fragility of the world economy. It is clear the Eurozone crisis has not been solved and the outlook for economic growth in developed markets remains poor. While such an environment makes a material improvement in industry flows unlikely, the out-performance after fees by the majority of our fund managers is enabling us to continue building assets in many of our strategies."
The company also confirmed reports that it is to seek the Financial Service Authority's approval on the launch of a new fund as part of its Merlin range in the second half of 2012, extending its Merlin fund of funds franchise "to meet demand from clients for more defensive investments," it said.
The share price rose 2.3% to 222p by 09:08.
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