BlueBay shares rebound on asset rise
Shares in BlueBay Asset Management, a UK-listed fixed income specialist, jumped over 10% today as the firm reported a 12% rise in assets under management in the three months to June, but analysts said they were sceptical on the sustainability of flows.
According to BlueBay, it managed assets worth $21bn (€13bn) at the end of June, compared with $18.7bn at the end of March. The $2.2bn increase was made up of net subscriptions worth $2.7bn and investment losses of $400m.
Over the 12 months to the end of June, the manager's overall assets under management grew 59.8%. Most of this increase was due to inflows into its long-only business, which launched two new funds in the quarter to the end of June. As at June 30, BlueBay managed long-only assets worth $15.1bn, up from $8bn the previous year.
By contrast, BlueBay's long/short business grew only 13.9% over the 12 months to the end of June, meaning that the proportion of overall assets managed in the form of hedge funds has shrunk compared to last year. Long/short assets under management rose slightly from $5.1bn at the end of June last year to $5.8bn on June 30. In terms of net returns, the hedge funds lost an average of 3.4% over the full year to the end of June.
Performance fees generated over the full fiscal year amounted to £23.9m, compared with £52m in 2007. Fees for the first half of 2008 are estimated to be £5.2m, less than a third of the amount for the previous six months, but more than the £4m guidance given a month ago. BlueBay had on June 16 warned that performance fees had dropped and profits would be lower than previously expected, leading to a 19% slump in its share price to 267.25p that morning.
Commenting on today's trading statement, BlueBay chief executive Hugh Willis said that "credit market conditions have been and remain difficult." Citigroup analysts Hayley Tam and Daniel Garrod said: "We are still sceptical on the sustainability of flows...We believe the outlook for further long-only fund launches in the year ending June 09 is poor, and see little forward momentum in the long/short business. As such, we continue to forecast a slowdown in net fund inflows."
Shares in the company, which was founded in 2001 and listed in November 2006, were trading at 211.5p at 12:21 today, up from 190.25p at market close yesterday. The shares have dropped over 40% so far this year.
BlueBay will announce its preliminary results for the full year to June 2008 on September 18.
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