GQG looks to SMAs for future flows

GQG Partners has reported net flows of US$6.2 billion in the first half of 2023.

Funds under management (FUM) rose from US$88 billion ($137 billion) at the end of December to US$104 billion, with the largest volume of assets under management being in the international strategy at US$39.3 billion. 

Increases in FUM were driven by US$6.2 billion in net inflows and positive market movements, with the firm averaging just over US$1 billion per month.

Tim Carver, chief executive, said: “We believe these flows reflect clients’ trust in our approach, driven by consistency of our long-term returns, and we continue to see a reasonable pipeline of client demand across multiple geographies.”

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The majority of this FUM is dominated by the Americas which account for 83.8 per cent of FUM.

Net revenue was US$237 million, and the firm said 97 per cent of this came from management fees.

Looking at where it expects fund flows to come from in the future, the firm highlighted the wholesale channel as well as the sub-advisory space where it is seeing both new opportunities and continued growth in existing relationships. 

Sub-advisory are those investment products formed and managed by a third-party firm that retains GQG to manage part or all of it on a sub-advisory basis, with 37.5 per cent of total FUM coming from that space. 

It has added a US equity sub-advisory relationship in the US and Canada, and two global equity sub-advisory relationships in Australia.

However, net flows in the space have declined, with 2022 sub-advisory flows being $3.5 billion compared to US$46.4 billion in 2021. In the first half of 2023, they were $2.4 billion.

It also highlighted another growth area could be in the US retail separately managed accounts (SMAs) which it could expand into Australia. In 2022, it launched a US equity strategy in the US retail SMA structure.

While it clarified this is not something that will happen in the short term, it could launch a similar product in Australia in due course.

“We have seen success with SMAs in the US and have significant capabilities there, so there is an opportunity to see if we can do something similar in Australia.”

The firm has 170 total headcount and is looking to expand this further via potential acquisitions. This includes a potential acquisition of the Pacific Current Group, which owns 4 per cent of GQG, announced in July. 

“We are looking at potential acquisitions and are looking to add talent and diversify our offering. We are always looking at how we can up the game,” Carver said.