Old Mutual AM increases fees in fourth quarter

After a volatile fourth quarter, Old Mutual's asset management subsidiary posted solid core earnings for 2015, stated its confidence about withstanding the market challenges in 2016 and announced a buyback programme.

Old Mutual Asset Management (OMAM) posted a $22.7m decrease in quarterly performance fee revenue, which led to a 22.3% decline in economic net income to $36.5mfor the fourth quarter.

However, management fee rates increased by over two basis points as OMAM enjoyed gross flows into higher-margin products.

Net client cash outflows of $3.2bn for the quarter were primarily attributable to outflows in the US equity sub-advisory channel, sovereign wealth fund withdrawals, and higher than usual hard asset disposals.

This increased net outflows for the full year 2015 to $5.1bn, which produced annualized revenue growth of $18.9m.

"In a difficult market, our affiliates continued to build on their long-term track records during the quarter," said Peter Bain, the unit's president and chief executive office, pointing to AUM representing 60%, 83%, and 92% of revenue outperforming benchmarks on a one-, three- and five-year basis at the year end.

"The first month of 2016 has presented the entire industry with challenges," he added. "However, we believe that our business is well positioned to withstand such market cycles, as our profit share model provides structural variability to our expenses. We remain committed to investing alongside our Affiliates in medium-term growth initiatives, and have made good progress to date."

Bain said the board has authorized a $150m share repurchase program, subject to shareholder approval.