Group has suffered an 18% decline in funds under management
Edinburgh Fund Managers has seen an 18% decline in funds under management for the year to 31 January 2001, with assets falling from £8.6bn to £7.1bn.
The group has cited the substantial decline in world equity markets as the major cause of the decline in assets, with 12% of the overall fall occurring in the second half of 2001.
John Wright, chairman of Edinburgh, said falls in world equity markets to January 2002 reduced consumer confidence and created a difficult environment for all investment houses, reducing revenues and new business sales.
Wright added that the effect of the poor market conditions was partially offset by the inclusion for the first time of the full-year revenues from Northern Venture Managers and half-year revenues from the acquisition of the Edinburgh Portfolio business in July 2001. Costs also rose by £3.4m.
Wright said: 'The fixed nature of our costs magnifies the impact of market movements and fee fluctuations on earnings per share in either direction. However, the board has taken significant steps to reduce the effect of recent market declines on earnings. We have focused on cost savings and building up higher margin areas of business.'
As well as the decline in assets under management caused by market falls, a number of Edinburgh's key investment and unit trusts have underperformed their peer groups.
In the open-ended universe the group's UK Smaller Companies, UK Fixed Interest, Global Equity, Emerging Markets, Latin American, North American, Pacific, Technology and Financial funds all underperformed their peer group average in the year to 12 March on an offer-to-bid basis with net income reinvested.
Over the same period, its UK Growth, UK Income, European, and Tokyo funds all outperformed their peer group average. In the investment trust universe, Edinburgh's flagship trust, the Edinburgh Investment Trust, managed by Robert Waugh, is ranked 18 of 28 in the UK Growth sector, returning -15.8% compared to the sector average of -17%.
Despite the decline in earnings, Edinburgh's chief executive Iain Watt received a £100,000 bonus. The group said this was related to the purchase of Portfolio last year, rather than to its assets under management.
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