Annus horribilis for NZ Funds Management

The year ended March was a particularly difficult one for New Zealand Funds Management.

Friday, August 4th 2023, 6:33AM

by Jenny Ruth

While most NZ fund managers reported a slump in annual net profit, NZ Funds' was at the bottom end with a 72.6% slump to just $753,000.

That was on a revenue slump of 6.7%, one of the smallest topline declines among the managers who have so far lodged their accounts with the Companies Office.

Fisher Funds reported a slightly greater 72.7% net profit slump but its revenue was down 30.3%, and Generate has been the only manager so far to eke out a small revenue increase.

NZ Funds' directors nevertheless decided to pay its shareholders dividends of $8.1 million, more than 10 times the profit, compared with the $23.9 million payout the previous year, which also well exceeded the bottom line result by 8.7 times.

But NZ Funds still had $10.8 million in cash at March 31, and its balance sheet showed net equity of $17 million, although that was down from $24.4 million a year earlier.

Among revenue items in the latest year, an 11.2% increase to $2.2 million from providing financial advice was swamped by the near 8% decline from investment management and the accounts note performance fees fell to $1.3 million from $2.3 million the previous year.

It has been a precipitous decline for NZ Funds since the year ended March 2021 when it recorded a $36.5 million net profit on revenue of $83.7 million and investment management fees of $81.3 million. Performance fees contributed $57.2 million that year.

Pie Funds Management won't be celebrating either with its net profit for the latest year down 56.2% to $3.9 million from $8.9 million the previous year on a 13% slump in revenue to $27.1 million.

Pie's investment management fees were down 14.8% to just below $23 million while its advisory fee income rose 22.3% to $1.1 million.

Pie's operating expenses also jumped 17.9% to $22.2 million, largely because of a 19.5% increase to $12.3 million in employee expenses – NZ Funds' expenses had risen 3.1%.

While Pie had $5.8 million in cash at March 31 and $11.1 million of equity on its balance sheet, its directors decided against paying dividends after the previous year's $3 million payout.

Devon Funds Management's net profit fell 26.7% to $2.9 million for the year on a revenue decline of 21.2% to $8.2 million and its dividend payout fell to $1.5 million from $7 million the previous year.

Devon's management fees were down 16.3% to $7.4 million while performance fees slumped to just $128,282 from a little over $1 million the previous year.

Devon managed to cut its administration expenses by 9.2% to just below $5 million with its salaries bill dropping 16.6% to $2.2 million.

Tags: NZ Funds