【3min SPARX: Base Earnings increased 20%, 1st Half Earnings of FY 2018】
SPARX Group’s first half results for 2018 showed a 15% decrease in operating profit over the previous year. However, the Group’s base earnings, which indicates the earning power that will form a sustainable and stable revenue base for its businesses, increased by 20%. The biggest reason for the decrease in operating profit is that performance fee values are down roughly 70% year over year. Meanwhile, reason behind the increase in the Group’s base earnings was an increase in management fees due to an increase in AUM in funds with fee rates that are higher than average for the Group. CEO Shuhei Abe suggests that more focus should be placed on the increase in base earnings than on the decrease in operating profit.
While there has been a major redemption from outside of Japan in the Group's primary Japanese Equity strategy, the balance of the fund is growing steadily because of the higher management fee rates in Japan.
AUM for mutual funds for individual investors in Japan has exceeded JPY 300 billion yen for the first time.
In particular, AUM for the market neutral Japanese equity investment strategy that launched this period has already reached JPY 25.4 billion in its first six months, becoming a new revenue source.
In addition to the market neutral Japanese equities already mentioned, when it comes to publicly offered investment trusts, SPARX intends to continue to create publicly offered investment trusts based on the Group's unique ideas, including launching sales of publicly offered investment trusts that combines investments in Japanese and Asian listed companies, starting at the end of October.
In terms of investment in real asset renewable energy power generation facilities, the Group has also teamed up with Toyota Motor Corporation, Chubu Electric Power, Sumitomo Mitsui Banking Corporation, and Mizuho Bank to create the Mirai Renewable Energy Fund, launched with the start of November.
In addition, the Mirai Creation Fund, which invests in unlisted venture companies worldwide, has already begun investing with the assets from the No. 2 Fund.
The SPARX Group is moving forward by building a business portfolio that is less susceptible to the impact of the extreme volatility of the equity markets as we continue to diversify our business, and we aim to continue to achieve steady increases to our base earnings.
This concludes my overview of the SPARX Group's first half results for FY2018 as well as updates on the progress of our businesses.