GQG reports nearly US$10 outflows, keeps FUM stable

GQG Partners has stemmed a substantial US$9.9 billion in outflows offset by stellar investment performance to end April with US$166.9 billion in total assets.

Year-to-date figures show the fund manager offsetting nearly US$10 billion in client money lost with US$13 billion in positive performance.

In April alone, GQG reported outflows of US$1.4 billion but managed to overcome these with a bumper performance of US$5.7 billion.

The fund manager's FY25 results ending December showed total assets reaching US$163.9 billion. Net income increased 7% from the prior year to US$463 million.

Analysing the full-year results, Morningstar equity analyst Shaun Ler said GQG's profits were much better than expected, benefiting from the compounding of its funds under management (FUM).

"Revenue exceeded forecasts as fee margins declined slower. Cost growth was much lower than our expectations. These factors led to higher operating margins, compared with our forecast decline," he said.

However, GQG's earnings outlook "remains weak" and "relative performance over the short and medium term is poor". He also pointed to the rate of net outflows accelerating considerably in recent months.

"Accordingly, we still expect group earnings to decline as FUM shrinks," Ler said, noting redemptions will likely continue without a clear catalyst for reversal.

"Current underperformance requires a full market reversal to validate its positioning, which is centred on GQG's defensive, anti-artificial intelligence infrastructure theme," he explained.

"We believe the consequent outflow risks are adequately factored into our base case, with current performance indicating headroom to manage costs if revenue deteriorate. Both salary and marketing/distribution expense growth in 2025 were considerably lower than expected, and management noted that 'the vast majority of our hiring is behind us'."

Overall, Morningstar retains its fair value estimate for no-moat GQG at $1.70 per share.

Morningstar defines "economic moat" as a structural feature that allows a firm to sustain excess profits for a long period of time.

"Shrinking FUM and revenue, along with inflation-like growth in salary and marketing costs, are likely to be partly offset by declining administrative expenses," Ler said.