Perpetual

Perpetual has announced funds under management (FUM) as at 31 December, 2012 of $24.3bn, 3.0% ahead of their level at 30 September 2012.

However, the headline number masks the fact that there was a net fund outflow of $600m (the same as in the September quarter), offset by a $1.3bn increase in asset values.

Of course, the overall FUM are what matter to the bottom line, and given fund managers’ high operational leverage, changes can make a big difference. Investors appear to have taken this point to heart, pushing Perpetual's share price up almost 40% since we last covered the stock on 17 Oct 2012 (Avoid – $27.12).

But it’s worth noting that average FUM is still likely to fall in the 2013 financial year on account of the lower starting level, and earnings per share are therefore likely to do the same.

In any case, the real ‘swing factor’ for long-term FUM are the fund flows, which are still doggedly stuck in negative territory. Until we see some evidence of that changing, we recommend you AVOID the stock.