City of London Investment Group Robust performance in volatile quarter

Download reportCity of London Investment Group (LON:CLIG) published a trading statement yesterday morning, covering 3Q’18. Over a volatile quarter for markets, City of London’s FUM rose by 1.7% to $5.4bn. Most of this increase came from inflows, with asset gains of $115m in the developed market and GTAA strategies offset by $38m outflow from emerging markets. There was a small positive market contribution, with the MSCI Emerging Markets Index up 1% in the quarter. Short term performance was mixed. The market volatility led to discounts widening in emerging markets. In developed markets, strong NAV movements contributed to outperformance.

New business: The pipeline continues to be active, with the $400m of potential business being in line with the previous statement. City of London indicate that the opportunities are spread across all the product areas, suggesting the recent underperformance has not had an effect.

Operations: With new business being at a lower fee rate than existing business, the average fee rate declined to 80bps. The rising exchange rate has also affected profitability, with the run rate for operating profit before profit share and EIP declining to £1.5m per month.

Valuation: The prospective P/E of 10.9x times is at a significant discount to the peer group. The historical yield of 5.7% is very attractive and should, at the very least, provide support for the shares in the current markets.

Risks: Although emerging markets can be volatile, City of London has proved to be more robust than some other EM fund managers, aided by its good performance and strong client servicing. Further EM volatility may increase the risk of fund outflows.

Investment summary: Having shown robust performance in challenging market conditions, City of London is now reaping the benefits in a more supportive environment. The valuation remains reasonable. FY2017 saw the first dividend increase since FY2012 and, unless there is significant market disruption, more should follow in the next few years.

Click to view all articles for the EPIC:
Or click to view the full company profile:
    Facebook
    Twitter
    LinkedIn
    Hardman & Co

    More articles like this

    Hardman & Co

    City of London Investment Group: You’re so special!

    City of London Investment Group plc (LON:CLIG) has announced its trading update for 2Q22. The big news, for most shareholders, will be the announcement of a special dividend of 13.5p per share. While we knew this

    City of London Investment Group plc

    City of London Investment Group: Results full of cash

    City of London Investment Group plc (LON:CLIG) has issued its annual report for FY’21. While the headline figures remain impressive after the Karpus transaction last October, it is some of the underlying figures that are the

    City of London Investment Group plc

    City of London Investment Group FuM of US$11.4 billion

    City of London Investment Group plc (LON:CLIG) has announced that it has today made available on its website, the following documents: Annual Report and Financial Statements for the year ended 30th June 2021 (the 2021 Annual

    City of London Investment Group plc

    City of London Investment Group: It’s an all-time high

    City of London Investment Group plc (LON:CLIG) has announced its final trading update for FY’21. The year has shown dramatic progress. The merger with Karpus has been complemented by strong markets, boosting FUM substantially. FUM finished

    City of London Investment Group plc

    City of London Investment Group hits all-time FuM highs

    City of London Investment Group plc (LON:CLIG), a leading specialist asset management group offering a range of institutional and retail products investing primarily in closed-end funds, provides a pre-close trading update for its financial year ended