K2 Asset Management has seen a turnaround in company performance with a pivot towards providing responsible entity services bringing over $1 billion to the business.
Assets under management at the start of June 2020 were $109 million but, a year later, this had increased to $1.2 billion. This was divided between $90.8 million in funds, $8.5 million in private mandates and $1.19 billion in funds under advice.
The company had previously struggled with underperformance and outflows with assets falling below $100 million in 2019 due to underperformance and loss of mandates. It also closed its Global Equities fund.
However, a company restructure announced in the first half of 2020 was paying dividends thanks to an appointment to provide responsible entity (RE) services for Apostle Funds Management.
In its half-year report to 31 December, 2020, on the Australian Securities Exchange (ASX), K2 said: “During the period, K2 Asset Management commenced providing responsible entity services to Apostle Dundas Global Equity fund from 24 December 2020. As at 31 December, 2020, the Apostle Global Equity fund had $1,084 million in funds under management.
“K2 completed the half year with over $1 billion growth of funds under management and administration, strong performance across all funds in the current financial year to date period, alignment with a third-party distribution manager and a strong balance sheet.”
Other reductions included outsourcing wholesale marketing, no short-term bonuses and no pay increases. It was also working on bespoke environmental, social, and government (ESG) strategies for Paua Wealth Management in New Zealand.
Speaking to Money Management, George Boubouras, head of research at the firm, said: “In 2020, we embarked on a K2 2.0 reset to lower costs, ring-fence the investment team, grow our cash and create a sustainable business which would enable us to grow going forward.
“This year, we want to build on that work and grow our funds under management on the back of strong performance.”
While assets in its five funds had fallen from $95.1 million in June 2020 to $90.8 million a year later, the firm said this was the result of clients taking profits from the funds after strong performance.
Its Australian Small Cap in particular was identified by SQM Research as one of the top-performing Australian exchange traded funds over one year to 31 May, 2021, with returns exceeding 50%. All four of the fund’s firms had beaten their benchmark over the period.
Over one year to 31 May, 2021, according to FE Analytics, the K2 Australian Small Cap fund had returned 51.2% compared to returns by the Australian Core Strategies alternative sector returns of 15.7%.
