Challenger’s boutique fund managers increased funds under management (FUM) by 9 per cent over the March quarter, as the group signalled it may be ready to expand its stable of boutique partners.
Asked whether Challenger was ready to expand its boutique business through further acquisition or joint venture partnerships, company chief executive Brian Benari said: “Eventually.”
“We’ve been focussed on consolidating and growing our existing 10, but we are also talking regularly to high-performing teams in a variety of areas,” he said.
Boutique FUM rose $1.5 billion, or 9 per cent, over the three months to 31 March to $17.8 billion, more than half of Challenger’s total assets and funds under management (AUM) of $31.4 billion.
Challenger said positive net inflows and market-linked performance helped drive the 16 per cent increase total AUM over the year to 31 March, including 6 per cent over the March quarter.
“We’re very fortunate to be bucking the industry trend and we think this is due to the ‘aligned interest’ business model of our boutiques,” Benari said.
“We provide services and support to talented teams who have equity at risk, leaving them to get on with doing what they do best. We think this is a primary driver of their outperformance against benchmark.”
Challenger’s boutique partners include Alphinity, Five Oceans, Kapstream and NovaPort.
About a year ago, Challenger built a separate distribution team for its boutique business and hired former Amundi Asset Management head of retail sales Cathryn Franks to head up the new team.
Improved financial markets also propelled Challenger’s life insurance AUM 14 per cent higher over the year to March to $9.4 billion.
Retail life sales advanced 23 per cent for the quarter to $364 million.
“With retail life sales of $364 million for the quarter, we remain on track and continue to target our 2012 retail life sales growth of 30 per cent and net book growth of 10 per cent,” Benari said.
Challenger’s main revenue stream is annuities, an area in which it has half of Australia’s market. However, annuities make up only about 6 per cent of inflows into allocated pension, signalling broad scope for growth.
Benari said Challenger’s target annuities demographic was expanding.
“The biggest and wealthiest generation in history is starting to retire and looking for safe, reliable income producing investments, but we also think there’s a new conservatism among other investors as well,” he said.
