The GQG Partners Inc
(ASX: GQG) share price is currently up close to 2% after the fund manager announced its November FUM update.
GQG is a fund manager that offers investors four main strategies – international shares, global shares, emerging market shares and US shares.
November funds under management
Every month, GQG tells investors how much funds under management (FUM) it has. The more money it manages, the more revenue and profit it can generate.
Most of the earnings that GQG makes is from management fees, not performance fees. So, earnings can be more consistent year to year, and growth is linked to a rise in FUM.
That brings us to the large FUM gain that GQG revealed for its latest month, though we shouldn’t read too much into month-by-month movements. It’s the long-term that’s most important.
November FUM finished at US$90.7 billion, up from US$83.8 billion. In percentage terms that’s an 8% rise in one month. The biggest increase was from its largest FUM segment – international equities saw an 11.4% bump from US$30.7 billion to US$34.2 billion.
Why I think the GQG share price is a buy
I’m not expecting another jump like that in December, it largely depends on what share markets do in the coming weeks.
But, what the company can somewhat influence is the amount of net inflows each quarter, which continues to be good.
A combination of fund outperformance and good inflows could see GQG continue to be a strong performer for a long time. I like the business’ investment style and I think it’s likely to achieve good fund performance results over the long term.
The dividend income could significantly flow from the business in the coming years. By 2024, it could pay an annual dividend per share of 13.2 cents based on the CommSec forecast. This would be a dividend yield of 9.1%.
Over the next 12 months, I think GQG could be one of the best-performing multi-billion sized businesses in total returns terms, particularly if share markets keep recovering.
