'Stay relevant': Perpetual's 'high-octane' strategy to survive

Written by John Collett

Perpetual's chief executive and managing director, Geoff Lloyd, says the key to thriving as an active fund manager is "remaining relevant and staying close to clients and clients' needs".

"If you don't stay relevant you are not going to survive," Mr Lloyd said.

Most of Perpetual's profits are generated by its fund management arm, Perpetual Investments, which is under pressure from low-cost index-tracking funds.

Colonial First State Global Asset Management announced on Wednesday it would be shutting its 25-year-old "core" Australian equities function, as well as its global resources unit.

While announcing a solid profit result for the half-year to December 31, 2017, the last result before Mr Lloyd steps down in June after six years in the top role, he said "there's a place for both passive and active and there is not another quality, long-term performer and active manager like Perpetual".

"We have evolved... in Aussie equities, the majority of new strategies have been concentrated equity strategies that are relevant, that are high octane, alpha-producing strategies," Mr Lloyd said.

The financial services company posted net profit of $68.1 million for the half  - 3 per cent higher than the earlier corresponding period.

Underlying revenue of $266.8 million was 6 per cent higher than the earlier corresponding period.

A fully franked interim dividend of 135 cents per share will be paid on March 26, up 4 per cent on the last interim dividend.

Perpetual Investments recorded profit before tax of $58.1 million, down 1 per cent on the earlier corresponding period.

James Carlisle, research director at InvestSmart Group, said the result by Perpetual Investments was pretty much flat, with an outflow of money from funds offset by rising markets.

"The other two parts to the business, Perpetual Private and the Corporate Trust, are doing absolutely brilliantly," Mr Carlisle said.

Mr Lloyd said Perpetual continues to "build out our global equities capability" and noted its Global Share Fund had beaten its benchmark over 1,2,3,5 and 7 years and was experiencing strong inflows.

He also said the Perpetual Equity Investment Company Limited, an ASX-listed investment company, which now has a three-year-plus track record, has been "very successful".

Perpetual Private, the wealth advisory business, posted profit before tax of $23.1 million, 24 per cent higher than the earlier corresponding period.

Mr Lloyd said the result reflects the success of targeting medical specialists, professionals and other high-net-worth individuals.

Perpetual Private includes the Fordham business, which provides financial advice and services to private businesses and their owners. "Fordham's strong growth continued and remained the largest referral partner to our advice business," Mr Lloyd said.

Perpetual's Corporate Trust business, which provides trustee services to the investment management industry, posted pre-tax profit of $$19.8 million, which is 18 per cent higher than the earlier corresponding period.

Mr Lloyd said there was strong growth in Managed Funds Services and Debt Market Services.

"Our Debt Market Services division remains a clear market leader and saw consistent growth in the first half," he said.

"And importantly, the Managed Funds business was appointed to a number of significant roles in the first half of 2018, which led to a greater contribution to Perpetual Corporate Trust's revenue growth," Mr Lloyd said.

Perpetual's shares were trading at just below $54 at the market close, or almost 2 per cent higher in a flat day for the market overall.

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