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CAPE TOWN – Anchor Group’s asset under management fell 6percent to R49billion in 2018 after a difficult year in the investment industry.

But adjusted headline earnings increased 1percent to R76.6million in the year to December 31, 2018, after the group held its own in the “horrendous” market, and grew its client base by 10percent, chief executive Peter Armitage said in an interview yesterday.

A final dividend of 10cents brought the payout for the year to 20c, versus 10c in 2017.

Looking at 2019, he said much depended on the markets. Year-to-date shares on the JSE were up 5percent, offshore markets were up 8percent, and the rand/dollar exchange rate depreciation year-to-date was about 10percent, although it was still very early in the year.

Significant developments last year included further diversified revenue streams. The private clients business was gaining assets of more than R300m a month, the group said in a presentation on its website.

The asset management business secured its first big mandates of more than R3bn last year.

The equity fund, which has a five-year track record, had returned 10.9percent a year since inception, versus 6.1percent a year for the peer group. Fixed-income inflows grew meaningfully.

Some 51percent of Anchor Stockbroking was sold to a black economic empowerment partner. Post year-end, 100percent of financial advisory business Erudite was acquired. Further “bolt-on” acquisitions might be on the cards in 2019, “as we would like to earn a few percentage points of growth from this”, said Armitage.

The difficult investment environment in 2018 was indicated by the 10.7percent decline of the JSE Capped Swix Index. The MSCI World index was down 8.7percent. The average dollar/rand exchange was 0.4percent weaker over 2017, while JSE trading volumes were down 39percent compared with 2017.

“Anchor did well to hold profit levels, and we intend to continue doing this year,” said Armitage.

The operating margin decreased to 22percent from 27percent, as no performance fees were earned, while lower activity levels resulted in lower private client brokerage revenue.

There was a change in asset mix, where more revenue was derived from fixed-income investments, where fees are lower. The company also invested in distribution initiatives that still have to bear fruit in terms of revenue.

Anchor shares closed 0.86percent lower at R3.45 on the JSE yesterday.