Wealth manager St. James’s Place (STJ) has demonstrated how strong its global network of fund managers has been in the first quarter by posting another strong set of results. Shares in the company improved 4% to 548p after it said funds under management increased £4.2 billion to a record £39 billion in the quarter to March, up 26% year-on-year.
The £2.7 billion cap managed to record this growth at a time when the UK economy grew by a modest 0.3%. St. James's Place demonstrated its consistency and strong client retention record by reporting a 36% year-on-year increase in net inflows. Total new investments increased 28% to £1.6 billion.
The strength of the numbers reflected improved investor sentiment, low interest rates and the quality of St. James's investment proposition and the market is bullish about prospects going forwards. Consensus points to £466 million pre-tax profit for the current calendar year, almost double the £252 million St. James's recorded in 2012.
However, the company comfortably beat City estimates last year and another set of forecast-busting figures could be on the way. Dividends have increased by a third over the past three years and based on this year's 14.2p forecast payment, the shares offer a yield of 2.6%.
St. James's performance has been supported by management’s investment in its sales force. The group recruited several IFA-qualified sales people ahead of the implementation of the Retail Distribution Review (RDR) in January, the new rules designed to protect consumers. Some of its competitors lost ground when they had to replace or re-train their sales teams.
Kevin Ryan at Investec Securities remains optimistic about prospects for St. James's Place: 'The outlook remains good for further strong growth, we believe, given the company’s unique, vertically integrated sales force. This, coupled with low interest rates and a focus on the UK’s mass affluent segment, should ensure this is sustained.'
The analyst believes that 'a key element of the fundamental attractiveness of St James’s Place, we believe, is the unique, self-employed sales force known as “partners”. We believe this will become an increasingly valuable resource as we expect IFA distribution for other UK life companies to become less effective in the post RDR environment.’
St. James’s also hit the headlines a few months ago when its largest shareholder, Lloyds (LLOY), sold part of its 57% stake in the company. This not only provided a broader shareholder base, it also provided much needed liquidity during a tough period for the markets.