Henderson Global Investors announced record profits on Wednesday as the laggard among UK listed investment groups turned star performer.
The FTSE 250 listed asset manager produced underlying pre-tax profits of £190.1m in 2013, a rise of 24 per cent on the previous year, in a rebuff to critics who have questioned chief executive Andrew Formica’s leadership.
The group also increased its assets under management to £75.2bn to the end of last December, an increase of 13 per cent compared with the previous year. Mr Formica plans nearly to double AUM to £130bn over the next five years.
The one critical note was sounded on bonus pay, which rose to £129m, almost double that of the previous year. Mr Formica defended the increase, saying it was in response to improving investment performance.
The results are a big contrast to the performance of the group’s FTSE 250 rival Ashmore, which announced a contraction in AUM 24 hours earlier. It highlights how the fortunes of asset management groups can turn swiftly as market sentiment changes.
A fifth of Henderson’s AUM are in European equities. As Europe is the region back in vogue and equities the favoured asset class, a fund manager with such a large exposure to both was likely to do well.
Alternatively, Ashmore is a dedicated emerging market debt fund manager, the region and asset class that has lost its appeal to a large chunk of retail and institutional investors.
It was so different to 18 months ago when Henderson was one of the worst performing asset management groups and Ashmore was the pick of the bunch in terms of inflows and profits.
Mr Formica, 42, has turned round the business, with a number of acquisitions and joint ventures that have diversified the group’s products and extended its global reach and distribution.
He said: “The business is in the best shape it has ever been since I took the helm five years ago. The backdrop is the best it has been for us too, with Europe and equities favoured by many investors.”
He has made big efforts at diversifying and extending the business in areas such as the US, Asia and fixed income after finally bedding down the acquisitions of New Star in 2009 and Gartmore in 2011.
He has also established the group as a “go to” house for equity income, a product offering he has been developing over the past two years as the baby boomers, people aged between 45 and 65, look for income in retirement.
Other key numbers include retail inflows of £4.4bn last year, although there were institutional outflows, and diluted earnings per share of 14.9p, a record high.
Henderson’s shares rose 2.64 per cent to close at 249.2p.