Perpetual reports turnaround

Australia's biggest independent wealth manager, Perpetual, has reported a turnaround for its flagship funds management arm, and forecast an improvement in first-half profit.

Australia's biggest independent wealth manager, Perpetual, has reported a turnaround for its flagship funds management arm, and forecast an improvement in first-half profit.

Chief executive officer Geoff Lloyd said guidance that December-half underlying profit would fall between $45 million and $50 million reflected the "underlying improvement we have made to the business", together with the benefits of stronger equity markets.

The company's profits depend on how the Australian equities market performs.

According to its last results, a 1 per cent movement in the market changes its annualised revenue by up to $2.25 million.

Speaking at the company's annual meeting, chairman Peter Scott reported net inflows of $200 million at Perpetual Investments in the September quarter.

"This is a pleasing development and is something we haven't seen for a few years now," he told shareholders.

Net outflows for Perpetual Investments were $1.8 billion in 2013, an improvement on the $4.1 billion of 2012.

But Mr Scott cautioned that conditions remained "challenging", with increased regulatory change, continued volatility and fragile investor confidence. Perpetual said it was 75 per cent through its "Transformation 2015" turnaround and cost-cutting program, and expressed hope that it would nab its long-running takeover target Trust Co by the end of calendar 2013.

Shareholders in Trust Co - one of the few companies enjoying a bidding war through 2013 - will vote on the takeover in late November.

Meanwhile, Westpac's fund management business, BT Investment Management, has reported that confidence has returned to the market, due to low interest rates and weakened concerns about global growth, and flagged earnings growth this financial year.

BT on Thursday reported a $51.25 million annual profit, more than double the previous year's $21 million, and in line with JPMorgan's forecast. The result was boosted by rising markets, low interest rates lifting demand for risk assets, and net inflows of $1.5 billion.

Questioned on market sentiment, chief executive Emilio Gonzalez told BusinessDay: "The market is at the right level. The next leg-up has to be earnings driven."

BT wants to tap into Australia's strong self-managed superannuation market, which tends to bypass managed funds, and launch three funds offshore: a global emerging small-cap fund, a global Sharia fund and an international small-cap strategy.

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