Industry superannuation investment group IFM Investors has reported a 37 per cent jump in annual profits to $114 million pre-tax for the June 2019 year.
The return resulted from a strong investment performance and new mandates from investors.
“The results highlight IFM Investors’ continued record of strong, long-term net returns to investors and the effectiveness of our uniquely aligned, investor-owned model which prioritises the interests of working Australians and pension fund members globally,” said CEO Brett Himbury.
IFM’s funds under management grew by 31 per cent to $140 billion, from $106 billion in 2017/18. Of that growth, $22 billion came in capital brought in by new investors with asset price growth delivering the remaining $12 billion.
About 86 per cent of the group’s products and mandates across all four asset classes (infrastructure, debt, listed equities and private equity) outperformed client objectives on a rolling five-year basis, after fees and taxes, Mr Himbury said.
“IFM Investors’ trusted and efficient operating model has again proven that when an investment manager focuses first on investors the rest follows. While other fund managers are looking to preserve margins in increasingly competitive markets, IFM Investors continues to think innovatively and build on our position as a leading provider of net returns for the benefit of the millions of people on whose behalf we ultimately invest,” Mr Himbury said.
However, Mr Himbury admitted that the low-interest-rate environment, with rate cuts expected in the US, Europe and Australia, would be a challenge for the future.
“It will be very difficult to lift returns with the base [interest] rate low and getting lower.”
But IFM would continue to find investments with adequate returns due to the scale of its business, its long-term approach to investment and its international networks, Mr Himbury said.
“In an increasingly challenging economic, geo-political and investment environment, in which ‘lower for longer’ [interest rates] has emerged as the central returns thesis, investors will increasingly demand skill, value and alignment. In such an environment, we will further invest in our business to provide new and extended capabilities to support our investors in such uncertainty,” Mr Himbury said
Much of the new investment mandates attracted to IFM over the last year come from Australia, as the local funds management sector shrinks and industry superannuation funds (for which IFM mostly invests) attract new members through their strong record of high returns and the negative publicity for their competitors resulting from the Hayne banking royal commission.
“In the last six to nine months, 18 equity managers have closed down in Australia,” Mr Himbury said.
Mr Himbury said that IFM Investors, which is owned by the industry super fund movement, has been independently valued at $1.045 billion. That represents a valuation increase of 23 per cent over five years.
“IFM Investors has continued to focus on environmental, social and governance issues. We recognise the need to deliver strong long-term returns to members in a manner that builds our social licence and meets the expectations of communities globally,” he said.
IFM now invests for 396 institutional investors across 22 countries which Mr Himbury said represents a 27 per cent increase in client numbers on the previous year.
The New Daily is owned by Industry Super Holdings