Net inflows strengthen again, but market falls reduce FUM

Two themes jump out at us at the close of FY22 (to 30 Jun 22). First, in the first full FY of CEO Andrew Shepherd’s tenure it has been a year of strategic strengthening, characterised by a return to consistent net inflows, following the ‘restructuring’ years of FY20 and FY21, which suffered net outflows. Most impressive now are the net inflows in Q3 and Q4, periods of sharp market falls, which can coincide with net outflows for investment managers.

Second, in absolute terms, investment performance saw gains in Q1 and Q2 (+£227m & +£317m), and sharp declines in Q3 and Q4 (-£850m & -£1,271m) as markets fell.

Our fundamental value reduces from 3,200p per share to 2,900p (also impacted by a slight increase in the discount rate used in our DCF model due to the increase in the 10yr gilt yield). However, with the recent share price fall to 2,160p it stands at a discount to our fundamental value of 34%. With such a strong franchise, evidenced by consistent net inflows in turbulent markets, we think the medium to long term prospects of BM remain very strong and see potential for a re-rating.