Its been a big few daysfor results this week. Companies all across the market have reported results, and the one sector that has stood out to me is wealth management.
Indeed, City stalwartSt. Jamess Place (LSE: STJ) reported its third quarter results earlier this week, andHenderson Group (LSE: HGG) has publishedits Q3figures today.
Barometer of sentiment
The results of money managers can be highly informative as theyre considered to be a barometer of wider market sentiment. Henderson, which is in the process of merging with US asset manager Janus Capital, reported today that the group had experienced heavy retail outflows since the EU referendum at the end of June. During the third quarter, 1bn of assets tied to investors falling into the retail classification left the companys funds and 70% of this outflow occurred in Junein the immediate aftermath of the referendum. The company reports that retail sentiment has remained cautious ever since.On the institutional side, net inflows of 0.4bn were reportedfor the period.
The evidence that retail investors left Hendersons funds after the Brexit vote, and havent come back, is telling. Henderson is one of the UKs most successful UK fund managers and 77% of the groups funds have outperformed their benchmarks over the past three years.
However, it seems investors are leaving the group for reasons other than Brexit as St. Jamess Place reported strong inflows for its third quarter.
Specifically, for the three months ending 30 September 2016 fund inflows for the companyrose 21% year-on-year to 2.8bn. After deducting client outflows during the period, net inflows came in at 1.7bn.Group funds under management are 12.8bnhigher than at the beginning of the year at 71.4bn, a record for the group.
Plenty of demand
St. Jamess results make it clear that theres a demand from investors out there for money managers, but its apparent from the figures above that Henderson isnt offering what its customers want. With this being the case, St. Jamess Place looks to be the better wealth manager for your portfolio.
Unfortunately, the companys shares dont come cheap. The shares currently trade at a forward P/E of 28.7 and support a dividend yield of 2.9%. City analysts are forecasting that the companys earnings per share will fall 9% this year before rebounding by 28% for 2017. If the company meets this target, between 2011 and 2017 earnings per share will have risen by 110% thats growth worth paying for.
On the other hand, Henderson has floundered over the past five years. The companys revenue has increased by a disappointing 10% for the period, and earnings per share are up by around a third.
So, if youre looking for a wealth manager for your portfolio, St. Jamess Place seems to be the best bet although the companys premium valuation may be too much for some investors.
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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
