NZ Fund Managers

[Snoopy]

Isn't fishers' NPAT 49.778? and margin ~39.7% - page 23?

Yes I made a typo on the net profit figure. Now corrected.

Milford Funds Limited financial accounts are below, but with a big caveat
https://app.companiesoffice.govt.nz/...49ACF3BF8AD107

Milford Funds pays a substantial management fee to its parent company Milford Asset Management. The later does not have to disclose its financials. So you can't work out what the true underlying profitability is without taking a pretty meaty guess. I'm also not au fait with if MFL is the management company for all funds or if its parent company also undertakes some services

Those are the only two I've ever bothered to 'snoop' on in NZ. Possible others disclose.

I have added Milford to my comparison table as well. I see in the 'Milford Limited' accounts, in the income statement, that there was a fee of $136.594m paid to the parent Milford Asset Management company (the fee you pointed out FM). You would have to assume that all the cost allocations are done in accord with the parent company's wishes. So if the parent were to decrease the fee required to be paid (and I do note this management services fee jumped an astonishing by $59.010m from FY2020 to FY2021), then the declared profit of 'Milford Limited' can be whatever Milford management want it be (within reason). I guess a net profit margin of 7.21% is there to appease the kiwisaver scheme overseers, so Milford don't look too greedy?

Note 8 in the Milford Limited accounts lists all the Milford funds that Milford Limited manages. This covers all the funds listed in the current Milford fund prospectus,

https://milfordasset.com/if-pds

less the AON branded fund, the kiwisaver fund and the wholesale funds. So it looks to me as though the company 'Milford Limited' does indeed manage all of the Milford funds (listed and unlisted).

SNOOPY

[Muse]

Yes I made a typo on the net profit figure. Now corrected.



I have added Milford to my comparison table as well. I see in the 'Milford Limited' accounts, in the income statement, that there was a fee of $136.594m paid to the parent Milford Asset Management company (the fee you pointed out FM). You would have to assume that all the cost allocations are done in accord with the parent company's wishes. So if the parent were to decrease the fee required to be paid (and I do note this management services fee jumped an astonishing by $59.010m from FY2020 to FY2021), then the declared profit of 'Milford Limited' can be whatever Milford management want it be (within reason). I guess net net profit margin of 7.21% is there to appease the kiwisaver scheme overseers, so Milford don't look too greedy?

SNOOPY

aye

Milford Asset Management Ltd - topco - is the equivalent to Fisher Funds Management Limited - they are both the top entity and reflect the full consolidated view. Ideally we'd be comparing like for like. We have topco financials for fisher, not for milford, the later we just have a subsidiary. A subsidiary that probably generates the vast majority of its income. and probably its expenses. but we don't know what in milford topco. its possible the charges are just for IP and all the bums on seats and technology is in MFL, and the management fee is a simple profit minimisation tool for PR purposes (thats what I expect). possible the consolidated group looks a whole like MFL npat adding back the after tax intercompany fees. but just speculation.

what do the npat figures % of revenue for milford funds ltd look like if you do that? probably look weird

[Snoopy]

Milford Asset Management Ltd - topco - is the equivalent to Fisher Funds Management Limited - they are both the top entity and reflect the full consolidated view. Ideally we'd be comparing like for like. We have topco financials for fisher, not for milford, the later we just have a subsidiary. A subsidiary that probably generates the vast majority of its income. and probably its expenses. but we don't know what in milford topco. its possible the charges are just for IP and all the bums on seats and technology is in MFL,

According to this link https://www.dnb.com/business-directo...185d55a1e.html, Milford Funds Limited has 13 employees and generates $US119.39m in sales whereas Milford Asset Management Limited https://www.dnb.com/business-directo...9eda2ee61.html has 210 employees and generates $US11.59m in sales.

Since I have already figured out Milford's 'investment team' contains 33 people (post 2 in this thread), it would be odd to have close to half of that investment management team inside 'Milford Funds Limited' with the others inside 'Milford Asset Management Limited'. So I would guess that those 13 'Milford Funds Limited' employees are more likely clerical positions 'booking sales' by keeping note of investment funds as they roll in, while all the actual investing expertise is outsourced to the parent 'Milford Asset Management'.

and the management fee is a simple profit minimisation tool for PR purposes (thats what I expect). possible the consolidated group looks a whole like MFL npat adding back the after tax intercompany fees. but just speculation.

what do the npat figures % of revenue for milford funds ltd look like if you do that? probably look weird

Putting some numbers on your speculation:

1/ The 'Management Services Fee' for 'Milford Funds Limited' amounted to $136.594m.
2/ If MFL had not paid this fee and booked this cashflow as profit, then they would have had to pay tax on it, leaving the amount to be added to profit as: 0.72( $136.594) = $98.348m.
3/ This would have increased MFL NPAT to $11.725m + $98.348m = $110.073m.
4/ This implies a 'net profit margin' of $110.073m/$162.710m = 68% (!)

That figure makes the net profit margin salted away by the Fisher team sound 'fundholder friendly'. However, given the future profitability of MAL is not determined by clerical staff and cleaners, I am picking this 68% figure overstates the true profitability of Milford managed funds, as an operation.

SNOOPY