GQG shares rise as Jain says AI rally is close to unravelling
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More news: Shares in GQG rose 1.09% to $1.85 in early trade as investors brushed off the fund manager’s recent underperformance as its net profit and dividend were ahead of expectations.
RBC Capital Markets analysts said GQG delivered a “positive” result as its US$225.9 million ($351.7 million) NPAT beat consensus by 1.9% and its dividend was 3.7% ahead of expectations. They were also “encouraged” that GQG’s spot funds under management (FUM) for August at US$171.3 billion was ahead of GQG’s July FUM of US$166.6 billion.
During an investor call, GQG chief investment officer Rajiv Jain said the AI bubble was close to unravelling.
Due to its defensive portfolio positioning, GQG has been underweight technology which has led to its underperformance.
What they said: “Reversal is gonna be vicious, look at NVIDIA [it] trades $30-$40 billion dollars a day when the money leaves — And these names, as you know, we were very bullish on these names not that long ago — there's a lot of money that'll go out, but the funnel to get in is actually pretty narrow,” Jain said.
“...So these things, when they unravel, it could be months, not years. But look, who knows?
“But I think what you want to see is that as the air comes out of the AI bubble, we feel it is actually bubble-ish now. Because look at ChatGPT 5. Right? I mean, it seems like it's not going to be as effective. I think it would be quite exciting, frankly.”
GQG FUM rises 11% during first half
The news: GQG Partners has posted a rise in funds under management (FUM) and an increase in net revenue for the first half of fiscal year 2025. However, its net flows tumbled as its strategies underperformed their relative benchmarks.
The numbers: Average FUM increased 10.8% to USD172.4 billion ($268.4 billion), up from USD155.6 billion, and ahead of market expectations of USD162.6 billion. Net flows decreased 28% to USD8 billion from USD11.1 billion.
Net revenue was up 11% to USD403.04 million, compared to the prior corresponding period’s USD363.1 million. However, analysts were expecting a revenue of USD407.4 million, according to Visible Alpha data.
The board also declared a quarterly dividend of 3.56 cents, down from the 3.78 cent dividend declared last quarter.
The context: GQG said its strategies underperformed their benchmarks over the one-year period and had mixed results over the three-and five-year periods due to defensive positions in its portfolios.
What they said: "This is largely a result of our relatively defensive portfolio positioning as compared to the benchmarks. This includes, for example, being underweight technology companies in our developed markets strategies and underweight China in the emerging markets strategy," GQG chief executive Tim Carver said.
"... Our financial results were driven in large part by our long-term investment performance, even in the face of recent underperformance.
"...We remain confident that by reacting to dynamic markets in a disciplined manner we will have the opportunity to find solid investments for our clients over the long term."
The source: ASX
