The GQG Partners Inc (ASX: GQG) share price is currently up by 5% after reporting its FY21 result.
GQG is a fund manager based in the US which offers a number of different investment strategies.
GQG’s FY21 solid report
These are some of the main highlights from the GQG result:
- Net revenue rose 74.9% to $397.9 million
- Net operating income rose 91% to $323.4 million
- Net income after tax rose 81.6% to $304.9 million
- Distributable earnings from IPO to 31 December 2021 of $50.4 million
- Profit / earnings per share (EPS) generated after IPO of 2 cents
- Dividend declared of 1.54 cents
Funds under management (FUM) growth is key for fund managers. Its FUM rose from $67 billion at 31 December 2020 to $91.2 billion at 31 December 2021, an increase of 36%. The company benefited from US$17.1 billion of net flows.
Interestingly, its core market – the US – saw the most growth of 39%. Australia saw 26.7% FUM growth and the UK saw 10% FUM growth.
Good investment fund performance will be attractive to investors and also help grow FUM. The four strategies of emerging markets, global shares, US shares and non-US international shares all show outperformance of their benchmarks over the prior five years, after fees.
FUM growth will be key for the GQG share price over time.
Did GQG beat the IPO guidance?
When GQG launched its initial public offering (IPO), it gave some expectations for the 2021 result.
Average FUM was predicted to be $80 billion – GQG achieved $80.5 billion.
Net operating income was expected to be $314.9 million – GQG achieved $323.4 million.
Net income after tax was expected to be $297.7 million – GQG achieved $304.9 million.
Perhaps the least important forecast was $399.4 million of net revenue – GQG achieved $397.9 million of net revenue.
More growth expected
GQG said that it’s expecting more business success as the investment strategies continue to produce good long-term performance.
It’s seeing strong business momentum across a variety of geographies and across channels. During the year, it launched three “quality dividend income” strategies in global, international and the US. These are more opportunities to create growth over the long-term.
Another benefit to GQG is that it has attractive fees compared to the competition. Its weighted average management fee was 0.492%, with less than 1% of revenue coming from performance fees. This suggests that revenue can be more consistent.
At 18 February 2022, it had FUM of US$93.8 billion, up from US$91.2 billion at 31 December 2021.
Summary thoughts on the GQG share price
The GQG share price has fallen 16% since the start of the year. With strong profitability and FUM performance, I think that GQG could be a smart idea whilst FUM and performance continue to do well. It has also promised to pay a high level of profit as dividends each year, which will be attractive for investors.
It’s one of the ASX dividend shares I’ve got my eyes on for the next few years.
