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‘We’ve become the piggy bank’: GQG share price jumps on half-year results

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The GQG Partners Inc (ASX: GQG) share price is climbing almost 4% today after the ASX-listed fund manager released a performance update for the first half of FY22. 

At the time of writing, GQG shares are trading for $1.59 apiece, a 3.58% gain on Wednesday’s closing price.

For comparison, the benchmark S&P/ASX 200 Index (ASX: XJO) is currently up 0.77%.

Let’s take a closer look at GQG’s half-yearly results. 

What did GQG report?

Investors are pushing up the GQG share price on the back of the company’s H1 FY22 results. It recorded the following highlights:

Positive net inflow of funds of US$6.3 billion Funds under management of US$86.7 billion, an improvement of 2.4% on the first half of 2021Net operating income rose 18.3% to US$174.2 millionNet income after tax fell 14.4% to US$125.3 millionA quarterly interim dividend of US$0.0198 per share was declared

Over a five-year period, all of GQG’s portfolios outperformed their respective benchmark indices. 

The GQG Partners US Equity Strategy achieved the biggest gain, posting a net return of 16.97% across a five-year period. It beat the S&P 500 Index (SP: .INX), which reeled in a net return of 11.31% across the same period.

In terms of outperformance, the GQG Partners International Equity Strategy led from the front. It achieved a net return of 9.11% across five years. Across the same period, the MSCI ACWI Index (Ex USA Index) provided a net return of 2.50%. 

However, GQG’s net profit after tax went backwards. The continued investment in personnel and overall business activities were possible drivers of this fall. 

What else happened in H1 FY22?

The sound performance of GQG’s investment strategies has seen three of its senior investment analysts promoted from deputy portfolio managers to portfolio managers. This was effective as of 1 July 2022.

A majority of revenue is still sourced from asset-based fees rather than performance fees. Performance fees accounted for 3% of total revenue. 

The company’s weighted average management fee for the period was 47.6bps, down from 49.6bps in the first half of FY21.

GQG will pay a quarterly interim dividend of US$0.0198 per share. This represents 90% of distributable earnings for the quarter ended 30 June 2022. 

The ex-dividend date is 16 August 2022 and the cash payment will be processed on 29 September. 

What did management say?

Commenting on the results that have helped boost the GQG share price today, CEO Tim Carver said:

Our financial result is driven in large part by our investment performance over the long term. As at the end of June 2022 our strategies continued to provide solid long-term performance as compared to their benchmarks, which we believe provides the underpinnings for continued business success. 

In addition, Carver said large investors were reducing their exposure to equities, and GQG had become a victim of its own success as those institutions chose to sell their winners, the Australian Financial Review reported. He told analysts:

Perversely, I think we’ve become the piggy bank, where if there’s a broad equity de-risking, clients are not selling the fund managers who’ve largely underperformed or underperformed more significantly than we have.

GQG share price snapshot

The GQG share price slumped 17% during the first half of FY22. It is also down 3% over the past six months and 18% over the past year. However, it has soared 28% over the past month.

The ASX 200 has performed a little better over the long term, posting falls of 2% and 7% across the past six and 12 months, respectively. In contrast, it is up just 7% over the past month.

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