NZ Fund Managers

[Muse]

Yes the 'Net Profit Margin' at Fisher Funds is certainly eye-watering. But in any industry where you use other peoples money 'off the books' to generate your income, your 'net profit margin' is going to look impressive. Whether it is out of line with other market players is something I am trying to determine.

Kiwi Wealth is publicly owned, for now. I have found the annual report from the point of view of the individual funds, but not from the point of view parent management company. If anyone can find where that 'public' management firm information might be, I would love to fill in the gaps in the table below.

FY2021 Comparison	Fisher Funds	Kiwi Wealth
NPAT {A}	$40.778m	?
Fee Income (B}	$125.906m	$659.227m
Net Profit Margin {A}/{B}	32.4%	?

References

1/ Kiwi Wealth https://www.kiwiwealth.co.nz/assets/...ments-2021.pdf
2/ Fisher Funds https://app.companiesoffice.govt.nz/...9381175A8E7B22

SNOOPY

Isn't fishers' NPAT 49.9778? and margin ~39.7% - page 23?

Milford Funds Limited financial accounts are below, but with a big caveat
https://app.companiesoffice.govt.nz/...49ACF3BF8AD107

Milford Funds pays a substantial management fee to its parent company Milford Asset Management. The later does not have to disclose its financials. So you can't work out what the true underlying profitability is without taking a pretty meaty guess. I'm also not au fait with if MFL is the management company for all funds (it appears to do most according to the notes) or if its parent company also undertakes some services and receives income and has its own expenses - hard to know what what group consolidated revenues and earnings are.

You could just assume those costs are pure intercompany and ignore them - gives you probably a decent picture of the true underlying revenue of milford.

Those are the only two i've ever bothered to 'snoop' on in NZ. Possible others disclose.

But Fishers is off the charts more profitable compared to its aussie peers. You can segment those into retail focued and wholesale focued. Retail are valued much more highly as margins are higher and FUM is more sticky, and have less shocks of sudden contract terminations. Some retailers are platinum, perpetual, magellan. Wholesale IOOF, BT, etc. Whole industry is in a state of flux after the hayne royal commission.

industry structure there is much different with self managed super schemes quite large. and post hayne there is been a shift in FUM from traditional asset managers to SMSF and indepedent advisors.

I've had happy hunting capitalising on that shift. Invested into Hub24 which is one of the leading independent platform providers over there. Hasn't been a pleasant 6 months but I'm still up 4.5x

Back to the point. Kiwisaver fees should be much cheaper because of the the magnitude of compounding forces driving up revenue off a scalable fixed cost base.

Members contribute regularly from their paycheck. Their pay tends to go up over the long term with inflation. Employers contribute on similar basis. Markets over the long term tend to go up. and you also get the occasional new member to kiwisaver, though the majority of that is done. Those things compound and compound and compound over the long term into huge increases in FUM from which revenue is ultimately derived. You don't need proportionately more staff to service growth in fum when that is coming from monthly contributions and market returns.

Of course you always get the corrections, like we are in now, or worse. And if you are don't play ball on fees when it comes for default scheme reappointments, you can get your mandate pulled.

but over the long term - its huge. there are graphs of the growth of kiwisaver under management you could easily find somewhere