Big jump in fee revenue boosts profits for fund manager Milford

Strong share market returns have helped boost fund manager Milford Asset Management. Photo / Supplied

Investment manager Milford nearly doubled its net profit in its latest financial year after a big jump in fee revenue.

Financial accounts for Milford Funds - a wholly-owned subsidiary of Milford Asset Management - show its net profit after tax rose from $6.88m to $11.73m in the year to March 31, 2021.

A big driver was the 40 per cent increase in its revenue from fees which jumped from $95.73m to $162.71m.

A fee break-down shows performance fees - those it gets from beating certain benchmarks - were the big driver of its total fee revenue increase.

While management fees rose from $73.5m to $93.4m, its performance fee income jumped from $21.2m to $68.2m.

Share markets around the world bounced back in April and May last year after falling off a cliff in reaction to global lockdowns due to Covid-19.

The accounts also show a number of related party transactions between Milford Funds and its parent Milford Asset Management.

Milford Funds owed $46.52m to its parent of which $43.6m was management service fees and a further $2.69m was related to tax. But the company has no fixed timeframe to pay the money back and its interest rate is zero.

Milford Funds paid a dividend of $6m to its parent company during the year. It paid no dividend in its 2020 financial year.

As of the end of March Milford Funds was owed $51.1m in fees by the retail and wholesale funds it manages. The outstanding fee was settled in April.

The company also paid $346,725 in audit fees on behalf of the funds it manages.

Milford Funds does not pay staff or key management personnel directly; that is left to its parent Milford Asset Management.

"It is not possible to separately identify the amount of key management personnel's compensation within the total management services fee of $136.6m," a note in the accounts said.

Brian Gaynor is a director and the second largest shareholder in Milford Asset Management. Photo / File

Milford Asset Management's largest shareholder is a nominee company call Mitre Peak which owns 27.62 per cent while co-founder and director Brian Gaynor is the second largest shareholder with 21.13 per cent.

Director Anthony Quirk also owned 7.25 per cent of the company.

Milford Asset Management was founded in 2003 to provide specialist investment management services and has more than $12 billion in funds under management of which around $3.4 billion is invested via its KiwiSaver scheme.