In mid-2016, the firm had reported a tough environment, posting a 99% profit decline during the first half, as reported.
For the full year 2016, earnings per share was down by 50%, according to the firm’s annual report. Profits were dragged down by a 96% plunge in gross performance fees. Gross management fees were also down by 8%.
Performance fees are generated when fund returns exceed the benchmark or high watermarks for the respective period ended, according to the report.
Key financial highlights:
Source: Value Partners
The firm’s two largest equity-focused funds, the flagship Classic Fund and the High Dividend Stocks Fund, had negative returns during the majority of the year, according to FE data. On the flipside, its fixed income fund, the Greater China High Yield Income, posted returns of 15% at the end of 2016.
According to the report, the overall fund performance of all Value Partners’ funds posted a cumulative return of 0.6% in 2016.
A Hong Kong-based spokeswoman for the firm said that the 2016 figure is higher than 2015 (-2.5%), adding that the overall performance is calculated by taking the asset-weighted average of returns of the most representative share class of all funds managed by the firm.
First net outflow since 2008
In addition to a decrease in net profit, the firm’s assets under management was also down to $13.2bn from $15.6bn because of net redemptions of $1.9bn during the year.
“With market uncertainty leading to extreme levels of volatility in 2016, we suffered from the first annual net outflow since 2008,” King Au, the firm’s new CEO, said in the financial results report.
Au joined Value Partners in December from Eastspring Investments, as reported.
The AUM of the firm’s three largest funds decreased
|
Fund size ($bn) |
|||
|
Fund |
Dec-2015 |
Dec-2016 |
Change |
|
Value Partners High Dividend Stocks Fund |
3.9 |
3.49 |
-11% |
|
Value Partners Classic Fund |
1.85 |
1.41 |
-24% |
|
Value Partners Greater China High Yield Income Fund |
2.27 |
2.12 |
-7% |
Source: FE
Cheah Cheng Hye, Value Partners’ chairman and co-chief investment officer, blamed the 2016 results on the investment cycle.
“Our style, based on value-investing, was out of favour, and so was the Asia-Pacific region,” he said in the report. “But we believe that was the cyclical bottom for value-investing and for Asia-Pacific market performance.”
Around 81% of the firm’s AUM are in absolute return long-biased funds, followed by fixed income funds (17%), alternative funds (1%) and quantitative funds and ETFs (1%), according to the report.
Despite the grim 2016 performance, the firm was optimistic on 2017. According to the report, its AUM has rebounded to $14bn, or up 6% from the end of 2016.
