Ninety One on Wednesday reported that it suffered net outflows of £10.6bn (R253bn) during its financial year ended March 2023, which the asset manager described as a year of ‘significant headwinds’. 

‘The past year was challenging for Ninety One,’ said Ninety One chief executive Hendrik du Toit in a statement. ‘We faced significant headwinds. This was not an easy year. Market conditions have not supported our offering.’ 

Du Toit stated that the £10.6bn net outflows comprised £10.4bn in institutional outflows and £239m in adviser-driven outflows. 

‘This was not caused by client unhappiness with Ninety One but by market conditions,’ he said during an investor presentation of the company’s annual results. ‘Three clients drove more than half of the reported net outflows this year. Their need for de-risking or reallocating drove this. It is important to highlight that they remain clients.

‘We are working hard to reserve the accelerating outflow trend and turn that into inflows,’ added Du Toit

    " data-onload="(function h(a,b){function c(){b?W.open():W.open("text/html","replace");W.write(I);q.__rendered__=!0;u[D+"__rendered__"]=!0;m=a.offsetWidth;n=a.offsetHeight;t=q.document.body;t.style["float"]="left";k=t.offsetWidth;l=t.offsetHeight;p=t.scrollWidth;r=t.scrollHeight;q.adjustFrame=f;u[D]&&(H(u[D]),u[D]=null);u[D]=L(f,50);U(e,3E3)}function d(){U(function(){H(u[D]);u[D]=null},5E3)}function e(){d();W.close()}function f(){var b=0,c=0;k=t.offsetWidth;l=t.offsetHeight;p=t.scrollWidth;r=t.scrollHeight;g=k>p? k:p;h=l>r?l:r;for(var d,e,f=0;f<t.childNodes.length;f++){var q=t.childNodes[f];d=q.offsetWidth;e=q.offsetHeight;d&&e&&20<=d&&20<=e&&(b=Math.max(b,q.offsetWidth),c=Math.max(c,q.offsetHeight))}if(m!=g||n!=h||w!=b||v!=c)b&&c&&b>=k&&c>=l?(V.width=b+"px",V.height=c+"px"):(V.width=g+"px",V.height=h+"px"),m=a.offsetWidth,n=a.offsetHeight;20>=g&&20>=h&&(t.style.position="relative");w=b;v=c}var g,h,k,l,m,n,p,r,t,w,v,q=a.contentWindow,u=q.parent,D="_inter_"+a.id,U=u.setTimeout,L=u.setInterval,H=u.clearInterval, I=a.getAttribute("data-contents"),V=a.style,W=q.document;q.__rendered__||u[D+"__rendered__"]||(q.__rendered__=!0,b?c():U(c,0))})(this,false)" style="box-sizing: border-box; border: 0px solid rgb(226, 232, 240); --tw-border-spacing-x: 0; --tw-border-spacing-y: 0; --tw-translate-x: 0; --tw-translate-y: 0; --tw-rotate: 0; --tw-skew-x: 0; --tw-skew-y: 0; --tw-scale-x: 1; --tw-scale-y: 1; --tw-pan-x: ; --tw-pan-y: ; --tw-pinch-zoom: ; --tw-scroll-snap-strictness: proximity; --tw-ordinal: ; --tw-slashed-zero: ; --tw-numeric-figure: ; --tw-numeric-spacing: ; --tw-numeric-fraction: ; --tw-ring-inset: ; --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: #3b82f680; --tw-ring-offset-shadow: 0 0 #0000; --tw-ring-shadow: 0 0 #0000; --tw-shadow: 0 0 #0000; --tw-shadow-colored: 0 0 #0000; --tw-blur: ; --tw-brightness: ; --tw-contrast: ; --tw-grayscale: ; --tw-hue-rotate: ; --tw-invert: ; --tw-saturate: ; --tw-sepia: ; --tw-drop-shadow: ; --tw-backdrop-blur: ; --tw-backdrop-brightness: ; --tw-backdrop-contrast: ; --tw-backdrop-grayscale: ; --tw-backdrop-hue-rotate: ; --tw-backdrop-invert: ; --tw-backdrop-opacity: ; --tw-backdrop-saturate: ; --tw-backdrop-sepia: ; display: block; vertical-align: middle; width: 0px; height: 0px;">During Ninety One’s 2022 financial year, the company reported net inflows of £5bn. Those net inflows comprised £2.5bn from the company’s institutional clients and £2.5bn from the company’s adviser clients. 

At the end of March 2023, 64% of Ninety One’s assets under management (AUM) were held by institutional investors, while adviser clients held 36%. 

The company said its AUM decreased by 10% to £129.3bn by the end of March 2023, down from £143.9bn, and its average AUM during its 2023 financial year declined 3% to £134.9bn from £138.6bn in its 2022 financial year. 

Ninety One reported a 20% drop in profit after tax for its 2023 financial year to £163.8m. The group’s adjusted operating profit decreased by 10% to £206.9m. 

Ninety One Ltd shares on the JSE fell by as much as 6% to R38.07 and were last quoted on Wednesday afternoon at R38.86 a share. 

The group reduced its dividend per share by 10% to 13.2 pence from 14.6.

 
 
Better Investment performance 
‘Investment performance was better than the year before,’ Du Toit said. 

Ninety One said over one-year, its firm-wide outperformance was 57% during its 2023 financial year compared to 50% during its 2022 financial year. Over three years, the group’s firm-wide outperformance was 71% during its 2023 financial year from 68% in its 2022 financial year. 

Since the firm’s inception until March 2023, it put its firm-wide investment outperformance at 75%. 

Over the one year that ended March 2023, 49% of Ninety One’s mutual funds ranked in the first quartile compared to 53% over the ten years that ended March 2023. 

The group’s adjusted operating profit margin declined from 34.7% in its 2023 financial year to 32.7% in its 2022 financial year. 

Ninety One said that during its latest financial year, it had faced challenging market conditions, including high inflation, a sharp increase in interest rates, major bank failures in the US and Europe, and disruptive geopolitics. 

In addition, the company said its 2023 financial year was characterised by a risk-off approach by investors, especially in the UK, and a growing regulatory burden. 

Du Toit said staff ownership of Ninety One now stood at about 28% of the company’s shares in issue. 

Ninety One’s management fees in its 2023 year declined by 4% to £608m, while the group’s performance fees dropped by 38% to £19.4m. 

Significant opportunities
Du Toit said Ninety One saw significant opportunities in global and international equities; emerging market equity; emerging market fixed income, including specialist credit; and sustainability and impact portfolios. 

He put the addressable market within Ninety One’s core investment competencies at £7tn, including £2.2tn in thematic equities, including sustainable equities; £2.2tn in global equities; £1.4tn in international equities; global emerging equities of £0.7tn in global emerging market equities and £0.4tn in global emerging market fixed income. 

That addressable market of £7tn consists of £4tn in the Americas, £2tn in Europe, the Middle East and Africa and £1tn in Asia and the Pacific. 

‘We are expanding our range of sustainable strategies in anticipation of structural demand growth,’ Du Toit said. 

Turning to the outlook, Du Toit said investment market conditions remained challenging and might remain so for some time. 

‘We are confident of our ability to regain growth momentum,’ he added. 

Du Toit said Ninety One was well placed to deal with the increase in the offshore limit to 45% under Regulation 28 of the Pension Funds Act. 

‘As the biggest player in the domestic [South African market], we are well positioned to deal with it [the increase in the offshore limit],’ he explained. ‘But when choice widens, every asset manager shows up,’ Du Toit said.

‘The client has more choice, and there is a natural market share decline for domestic [asset managers].

‘I think our team has done well at managing that. We are comfortable competing for that market and holding our market share, but it is more competitive,’ Du Toit said.