Ninety One achieves record profits, but expects a ' rougher sea' ahead

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Ninety One CEO Hendrik du Toit says "needle-moving" long-term growth will come from North America for the firm.
Ninety One CEO Hendrik du Toit says "needle-moving" long-term growth will come from North America for the firm.
Gallo / Foto24 / Felix Dlangamandla

SA's biggest asset manager, Ninety One, posted record full year earnings, and record assets under management (AUM) after attracting £5 billion (~R99 billion) net inflows in the year ended on 31 March.

Thanks to these inflows, Ninety One's AUM jumped 10%. CEO Hendrik Du Toit attributed the increase to the good run for equities in the past year and the company's outperformance. Ninety One's three-year outperformance against the benchmark is currently sitting at 68%.

Thanks to this, the company's profit before tax also rose to a record high of £267.1 million pounds, 31% higher than in 2021. This boosted the firm's basic earnings per share by 34% compared to the year ended in March 2021.

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But Du Toit is cautious about the year ahead as more investors seem to be adopting a conservative risk profile because of the uncertainty coming with the rising global inflation and the Ukraine-Russia war.

"Business and market conditions have deteriorated towards the end of the reporting period and are expected to remain challenging," said Du Toit.

While Ninety One still sees "substantial long-term growth opportunities", when investors adopt a more conservative risk profile, it does becomes harder for asset managers like Ninety One. It has a "risk-on" approach, investing mostly in equities and has substantial exposure to the emerging markets.

"We are going to give it a hell of a go this year. But we are betting on a more sticky wicket. The conditions are tougher…In the near term, we will have to work harder to achieve good results," he said.

Du Toit said Ninety One hasn't seen that much impact yet, which is why it still reported record inflows. It did, however, start to see change in the second half of its financial year. Up to December, there were good inflows towards riskier assets like equities across the industry. But that started to slow down.

"It is just a rougher sea. But we've been through this many times. You just have to put your head down and do your job and always remain focused on the long-term," said Du Toit.

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