VGI Partners (ASX: VGI) announced its June 2020 funds under management (FUM) and performance fee update.
What is VGI Partners?
VGI Partners is a high conviction global equity manager that consists of a compact team of investment professionals based in Sydney, New York and Tokyo.
VGI Partners was founded in 2008 and according to its prospectus, manages funds of around $2.9 billion. VGI’s flagship fund is the VGI Master Fund. The fund was established in 2009. Another strategy it manages is the ASX-listed VGI Partners Global Investments Limited (ASX:VG1).
June 2020 FUM update
The fund manager announced that its FUM fell by $300 million from $3.2 billion at 31 March 2020 to $2.9 billion at 30 June 2020.
VGI Partners said that the reduction in FUM was almost entirely due to performance. That suggests that its FUM dropped by almost 10% over the quarter due to the difficult COVID-19 circumstances.
Performance fees
VGI Partners recognises performance fees as and when they become due and payable.
Performance fees for each fund and individually managed account managed by VGI Partners are crystallised at the end of the relevant performance calculation period – usually every six or twelve months.
However, VGI Partners doesn’t expect to report any material performance fees for the six months to 30 June 2020. This period is its half-year report. As you’d expect from an investment fund, performance fee revenue will fluctuate significantly across different periods.
Summary
A single 3-month period doesn’t make or break a business. I can see why the VGI Partners share price is down 4% in reaction to this, but it will be the long term performance funds and the ability to attract more FUM which will drive future performance. I’m not personally looking to buy shares. But I can see why people may want to buy today – it’s close to a 52-week low, aside from the bottom of the selloff on 23 March 2020.
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