Investment house IFM Investors has highlighted the value of its member-owned structure by recording a 33 per cent jump in funds under management (FUM) over the 12 months to June 30 2017.
That pushes its the total investment portfolio to $92.9 billion.
An offshoot of the industry superannuation movement, IFM manages money for a range of Australian industry super funds and international pension funds. It invests for over 15 million worker members and 244 institutions across 14 countries.
The group did not break out overall return on investments, with CEO Brett Himbury saying that FUM totalled $69.5 billion a year earlier. A large part of the 2017 growth included $18.2 billion in additional investments raised from both new and existing investors.
However Mr Himbury did say that in all asset classes “93 per cent of all products and mandates over five years have outperformed client objectives after fees and taxes. It’s a very strong result and it means that lots of people are going to retirement in a stronger position than they previously would have been able to afford.”
IFM’s success in the market was “increasing the pressure on fees and margins” in the for-profit funds management sector and as a result would help push down costs across the market.
IFM, he said, had made a pre-tax profit of $34 million that was “relatively low” as the group’s ownership structure meant it was “focused on increasing returns to investors as opposed to shareholders”.
“Profit grew over the year but it was not as up as much as funds under management,” Mr Himbury said. “Our results highlight the value of our superannuation fund ownership model which underpins and drives our culture, motivation, values and decision making,” he said.
Mr Himbury said the $18.2 capital inflow boost was sourced “about 50/50 from new and existing investors,” Mr Himbury said.
The demands of overseas pension funds for regular income investments meant that the ‘debt’ asset category was the fastest growing in the portfolio, up more than 50 per cent.
The Trump administration in the US was having difficulty boosting infrastructure spending Australian investors hoped to capitalise on to the extent promised. “It may have been easier if the administration had led with infrastructure and not health care (in its legislative agenda) as health care has created antagonism between Republicans and Democrats.”
However Mr Himbury said IFM was targeting growing opportunities in US transport infrastructure like toll roads, sea ports and air ports”. While major Australian airports were privately leased “in the US the vast majority are in public hands and “Australian airports offer a more pleasant, safer experience than US airports,” he said.
Mr Himbury said that recent media reports claiming IFM was looking to sell its Ecogen gas-fired power generation business in Victoria were premature. However the lack of a coherent carbon policy in Australia meant “the energy and electricity markets are suffering considerable governance and investment insecurity”.
As a result the group was reviewing energy assets “to see whether the holdings should be held, grown or divested,” Mr Himbury said.
“Despite increasing global political and economic uncertainty IFM Investors, equipped with its unique ownership model, will remain well positioned to capitalise from the growing appetite of investors to partner and invest with a fund manager that is aligned with their member beneficiaries,” he said.
The New Daily is owned by a group of industry super funds