The Pendal Group Ltd (ASX: PDL) share price has dropped 10% in early trade after announcing its half year result.

Pendal Group is the new BT Investment Management. Having moved away from Westpac Banking Group (ASX: WBC), Pendal is now one of Australia’s largest fund managers, with more than $100 billion invested across its business.

Pendal’s HY19 Result

Pendal reported that its statutory net profit after tax (NPAT) declined by 37% to $69.6 million compared to the same period last year and its cash profit dropped by 26% to $84.5 million.

The decline in the result was largely impacted by much lower performance fees, which fell 91% to $4.4 million from $47.6 million.

Base management fees were down only 4% to $237.6 million and operating profit before performance fees saw a fall of 6% to $105.2 million.

Pendal said that global markets were volatile and combined with Brexit uncertainty resulted in cautious investor sentiment, particularly on Europe, leading to subdued industry fund flows in the region, where Pendal manages a significant amount of funds.

Total funds under management (FUM) closed at $100.9 billion, which was down $0.7 billion for the half, but up 2% compared to a year ago, led by lower markets, partially offset by the lower Australian dollar and “strong” inflows into cash and fixed income strategies.

Pendal Dividend

The Pendal Board decided to declare an interim dividend of 20 cents per share, which was a 9% cut compared to the 22 cents per share dividend a year ago.

Pendal Management Comments

Pendel CEO Mr Emilio Gonzalez said: “Although the start of our financial year coincided with one of the most difficult periods for markets since the GFC, our business attracted strong institutional flows into our Australian equities, cash and fixed interest strategies.”

Is Pendal A Buy?

At this stage in the cycle I don’t think buying a fund manager is the right idea. Investors can decide to pull money out of a fund and investors may then decide to pay less of a multiple for (lower) earnings.

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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).

At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.