River and Mercantile Group finishes year with strong Q4

Asset management company River and Mercantile Group PLC (LON: RIV) finished the financial year with growth in its assets under management and improved investment performance.

During the fourth quarter, AUM grew 10% to £39.8 billion, with investment performance adding £0.5 billion and positive across all divisions. Net flows for the period were £3.0 billion – equivalent to 8% of opening AUM – and gross sales were £2.8 billion (including a £2.0 billion structured equity mandate for a local government pension scheme).

During the full year, the Company’s AUM rose 18% to £39.8 billion and investment performance added £0.6 billion. Net flows stood at £5.4 billion, representing 16% of opening AUM; gross sales finished at £6.9 billion.

River and Mercantile Group comments

Company CEO James Barham, stated,

“This quarter has seen strong growth in AUM/NUM, with continued positive sales of structured equity mandates in Derivatives Solutions and global equity mandates in Institutional Equities. In addition, investment performance for the period was positive across all divisions.”

“We have discussed the benefits of our diversified business model for a number of years and in particular our low beta characteristics compared to many of our asset management peers. It was interesting to see this proven during the fourth calendar quarter when equity markets fell significantly, yet both our assets and revenues remained resilient. We continue to develop a range of Macro strategies, many of which will provide positive absolute returns in negative equity markets.”

“In the year, we have seen a strong return to growth from our Fiduciary Management business as the market normalises following the CMA review. We expect activity levels to increase as we move into a window during which we expect a significant number of legacy mandates across the market to undertake formal reviews.”

“We continue to have a positive outlook on markets, which we believe are supported by a stable environment. Globally, valuations still look fair, credit conditions are improving and overall economic conditions are on the up. Accordingly, our River FOURcast is indicating STABLE over the next six month period and we have therefore positioned our client portfolios for continued growth, however, there is obvious political risk in certain markets and we will continue to monitor developments in this area.”

Investor notes

The Company’s shares have rallied 4.14% or 11.00p following the update, up to 277.00p a share. Numis analysts have upgraded their stance on River and Mercantile Group stock from ‘Add’ to ‘Buy’, their p/e ratio currently stands at 12.17 and they have a dividend yield of 4.74%.

Elsewhere in asset and investment management, there have been updates from; Brewin Dolphin Holdings plc (LON: BRW), Hansard Global plc (LON: HSD), AJ Bell PLC (LON: AJB), Intermediate Capital Group plc (LON: ICP) and Highcroft Investments plc (LON: HCFT).

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Jamie Gordon
Senior Journalist at the UK Investor Magazine. Also a contributing writer at the Investment Observer, UK Property Journal and UK Startup Magazine. Postgraduate of King's College London with a specialisation in Business Ethics. Interested in Development Economics and David Hume.