With Assets slipping back in the latest quarter but sharply higher than a year ago, the Anglo-South African Investment house reports half-year numbers next week.

Ninety One (LSE:N91) is due to publish interim results on 16 November covering the six months to 30 September, giving investors their first detailed look at profits and client flows since the group's full-year figures in June. No new financial results have been released since then, and the most recent data point remains the quarterly assets update issued in October.

That statement showed assets under management of £181.4bn at 30 September, down from £184.0bn at the end of June but well ahead of the £152.1bn reported a year earlier. The quarterly dip of about £2.6bn followed a solid run: assets had risen from £171.8bn in March to the June figure. The quarterly updates give no breakdown of how much of each move came from markets and how much from client flows, which makes the interim statement particularly useful.

About the company

Ninety One is an active investment manager that began in South Africa in 1991 and is now dual-listed in London and Johannesburg. It manages money on behalf of institutions, financial advisers and individual investors across a range of strategies, including stock-focused, fixed income, multi-asset and alternatives. Its clients are spread across regions that include the UK, Africa, Asia Pacific, Europe and the Americas, and the firm positions itself around active management with a distinct emerging markets heritage.

As an asset manager, the group earns most of its Revenue from management fees, which are calculated as a percentage of assets under management. Income therefore depends on two things: the level of assets, which moves with markets and client flows, and the average fee rate, which varies with the mix of strategies and mandate sizes. Costs are mainly people and technology, so the Operating Margin tends to widen when assets grow faster than expenses.

For the year to March, management fees rose 9% to £617.3m, adjusted operating profit increased 12% to £211.3m and the operating margin reached 32%. Assets under management stood at £181.4bn at 30 September, compared with £152.1bn a year earlier. The Dividend for the year was 13.4p, and the company also returned Capital through buybacks.

Flows are the key question

Flows were the sticking point at the full-year stage. In the year to 31 March, Ninety One (LSE:N91) returned to annual net inflows of £2.8bn, but the pace slowed in the second half. Asia Pacific was a major contributor, whereas the UK and Africa recorded outflows. Management acknowledged unexpected redemptions and delayed inflows in the UK, while South Africa suffered structural outflows from institutional retirement funds and the loss of a long-standing mandate.

Chief executive Hendrik du Toit said at the time that the Business was focused on competence and quality rather than size, while stressing that net flows matter as an indicator of the health of client relationships. Whether the first half shows an improvement on the second-half slowdown is likely to be the main area of attention.

Fees are the second issue to monitor. The average fee rate fell to 40.7 basis points in the last financial year, and the company guided to a range of 38 to 40 basis points. Finance director Kim McFarland attributed the decline mainly to a mix of large mandates at lower fees, not solely to the assets brought in through the Sanlam transaction, which added £18.3bn to the total. Du Toit described the resulting shift towards fixed income as intentional, intended to support margins and stability.

How asset managers are affected by flows and fees

Net flows, the difference between new money invested and money withdrawn, are a measure of client confidence and a driver of future fee income. Market movements can raise or reduce assets in the short term, but sustained inflows suggest products and performance are meeting client needs.

Fee rates face a long-term pressure across the industry, as large institutional mandates and lower-fee products become more common. Managers respond by growing assets, shifting mix and managing costs, so changes in fee margin are worth reading alongside asset totals.

What to watch in the interim results

The results on 16 November should show flows by region, the fee rate against the guided range of 38 to 40 basis points, and cost growth. A recovery in UK flows, stability in South Africa and continued momentum in Asia Pacific would be relevant markers.

Investors may also look for commentary on the integration of acquired business, the Partnership on active Exchange-traded funds and any update on capital returns. Because markets drive average assets, the movement in the period will be as important as client behaviour when judging how fee income developed.

A profitable base to build on

Those concerns sit alongside solid profitability. For the year to March, management fees rose 9% to £617.3m, adjusted operating profit increased 12% to £211.3m, and the operating margin edged up to 32% from 31.2%. Adjusted Earnings Per Share rose 12% to 17.4p. Pre-tax profit, by contrast, grew just 2% to £207.5m.

Shareholders received a full-year dividend of 13.4p, up 10%, including a 7.4p final. The group also returned £27.4m through buybacks, reducing the share count by 17.3m, and estimated a capital surplus of £163.4m after the dividend.

Higher average assets should help fee income in the half-year, given the increase in the asset base during the period and the Sanlam contribution, although the lower fee rate and any change in costs will determine how much reaches the bottom line. Adjusted operating expenses rose 8% to £448m last year.

The strategic backdrop includes integration of the Sanlam business, described by management in June as progressing well, and a partnership with State Street Investment Management covering active exchange-traded funds. Ninety One (LSE:N91) has also been emphasising the shift in artificial intelligence use from experimentation to adapting its business model, and investors may look for evidence of that when the company reports. The group, founded in South Africa in 1991, remains dual-listed in London and Johannesburg.