Ninety One’s annual dividend lower as it adjusts to risk-averse markets

Ninety One’s CEO Hendrik du Toit. SUPPLIED.

Ninety One’s CEO Hendrik du Toit. SUPPLIED.

Published Jun 6, 2024


Ninety One, the global asset and wealth manager, has proposed a 6.4 pence final dividend, leaving the 12.3p payout for the year to March 31 some 7% lower than a year before.

The group said business conditions were challenging. Assets under administration were down by 3% to £126 billion, while the net outflow of funds amounted to £9.4bn. The dividend policy is to pay out at least 50% of taxed profit, plus the remainder of after-tax earnings not required for investment or regulatory purposes.

Basic earnings a share increased 1% to 18.4p and adjusted earnings per share decreased 8% to 15.9p. On the JSE, the share price fell 3.85% to R38 by early yesterday afternoon.

CEO Hendrik du Toit said Ninety One and many other public-markets-centric active investment managers faced headwinds through the year, but the company reported “robust” financial results, and he was confident of the underlying strength of the business.

He said over the past year, most strategies offered by them were not aligned with the immediate preference of asset owners for lower risk or uncorrelated assets.

The higher-for-longer interest rate scenario supported risk aversion and lowered the opportunity cost of not deploying capital into risk assets. This depressed the appetite for investment in emerging markets. Also, equity market performance was “extremely narrow” for the first part of the year, favouring passive equity investment over active, in developed markets.

“To build strong market positions takes time and commitment, and the discipline not to change tack to pursue short-term market opportunities. Over time we intend to grow by offering client-relevant strategies that produce good long-term results,” he said.

A combination of focus on carefully chosen investment capabilities, distribution reach into large markets, and a quest to improve execution would realise the growth potential of Ninety One, he said.

“There are signs that market returns have been broadening towards the back end of the reporting period, which could restore demand for active equity investment in due course. At the time of writing this report, it was still too early to see evidence of returning demand for emerging market investments,” he said in the annual report released yesterday.

Staff hold 30.6% of the company, up from 28% at the same time last year.

“Stability and our owner culture are key foundations for Ninety One and we have no intention of undermining them because of temporary headwinds. We think and act like owners, not employees … this long-term orientation enables appropriate alignment of interests with our stakeholders,” he said.

He said the firm-wide investment performance had deteriorated over the year. Style factors in a few large strategies had struggled to keep pace with broad benchmarks while remaining competitive against peers.

“In times like these, we support our investment teams as much as possible by limiting distractions and providing them with the resources they need to deliver competitive investment results,” he said.

The company viewed the North American institutional and sub-advice opportunities as primary medium-term growth drivers.

In order to serve the growing pools of capital in the Middle East better, regulatory approvals had been received to establish an office in the Kingdom of Saudi Arabia, while approvals were being sought for an office the United Arab Emirates.

Chairman Gareth Penny and Du Toit said in the annual report that despite the market rally towards the end of the financial year, the new reporting period would offer challenges and “we enter it with appropriate levels of caution”.

“We continue to invest for long-term growth. Ninety One is a resilient business, with a largely risk-on product offering and a track record of navigating difficult conditions and change. We see ample long-term growth opportunities ahead despite current market conditions and the rapidly changing world in which we operate,” they said.