Aim-listed specialist IFA firm, Frenkel Topping, has revealed it is has weathered the Covid-19 storm better than bigger players thanks to defensive positioning and high levels of cash.
Frenkel Topping revealed in its full year results that since the coronavirus kicked off it has sustained a 4.1% hit to assets under management which fell to £849m at the end of March.
Speaking to Portfolio Adviser CEO Richard Fraser said the firm benefited from having more defensively positioned portfolios and being overweight cash going into the lockdown. “Our sweet spot is risk profile 3 and 4 so we were in a great position from a client perspective,” he said. The FTSE All Share fell 26% over the period.
For its full year results, published on Tuesday, the firm reported assets under management grew by 15% to £898m by 31 December 2019. Half of its AUM growth was from its discretionary wealth business Ascencia, which saw assets rise 32% from £309m to £399m.
Pre-tax profits at the firm were up 9% at £1.2m, while revenue came in at £8.6m.
Quilter, Tatton and Integrafin assets battered by Covid-19
Frenkel Topping‘s showing during the coronavirus sell-off compared favourably to other financial advice firms.
Quilter warned it would fall short of its operating margin target of 27% after sustaining a £15bn hit to its assets under management in Q1 which saw assets tumble from £110.4bn at the end of 2019 to £95.3bn.
Net inflows of £500m across the business were flat year-on-year following the negative coronavirus market impact.
Integrafin said its funds under direction had dived 11% over the quarter to £35.0bn. It noted that this was better than the FTSE All Share Index and MSCI World Index which fell by 26.0% and 16.1% respectively.
Tatton revealed its assets had also fallen sharply as the coronavirus kicked off. In its full year results to 31 March 2020 it said AUM had fallen from a peak of £7.6bn on 21 February to £6.7bn though this was still up 9% on the year before.
Frenkel Topping CEO ‘hopeful’ on M&A deal despite coronavirus disruption
Fraser said it was too early to say whether Covid-19 would impact Frenkel Topping’s earnings this year.
But he doesn’t anticipate having to cut the dividend in 2020. The advice firm paid out a dividend of 1.35p a share in 2019.
The only reason he anticipates that changing is if Frenkel Topping manages to strike up an M&A deal which he is “hopeful” could still happen despite the coronavirus disruption.
“It really depends how long we’re in lockdown, if that goes on longer than expected, it’s going to drive things back,” he told Portfolio Adviser. “But I am hopeful one will happen this year.”
In the last year Frenkel Topping’s IFA business has launched several joint ventures with personal injury law firms including Hudgell Solicitors, announced today.
Its DFM business Ascencia partnered with financial advice firm Truly Independent in February to broaden its distribution capabilities.
The specialist financial adviser was itself a takeover target of private equity group Harwood Capital earlier this year. But the deal fell through by mid-February.
