Income Asset Management has hit record bond trading revenue of more than $1 million already in October as interest rates increases prove beneficial to its fixed income offerings.

Fixed Income specialist Income Asset Management (ASX:IAM) has announced its bond trading revenue for October has already passed $1m achieving more than 30% of FY22 revenue in less than a month.

IAM said while still at the start of October, it is already a record month for the group, with interest rate increases proving beneficial to its fixed income offering to corporates and investors.

In FY22 total trading revenue was $2.95m, while September saw record revenue surpassing     $1 million for the month.

 

Investment highlights for Q1 FY23

The new financial year has seen significant growth in client numbers as fixed income markets continue to deliver compelling investment opportunities.

IAM has seen a 20% increase in client numbers quarter on quarter. The source of new clients includes private investors, through increasing engagement with its intermediary partners, financial advisers and stockbrokers, along with growth in the middle market segment.

There was a $300m increase in assets under advice (AuA) in Q1 2023 to $2.3bn. IAM sees the pace of client growth continuing to accelerate as the fixed income market offers, in general, a lower risk alternative to equity market investments and higher returns than cash.

IAM has seen an increase flow from USD bonds back into AUD issues as the AUD/USD has moved below 65 cents with existing holders of USD issues (unhedged) taking advantage of the currency move.

IAM Capital Markets have also successfully placed two asset backed transactions raising over $44m through September for Medpro Finance and Butn (ASX:BTN).

Clients across institutional, middle market and private client investors participated in the capital raises.

IAM has a significant pipeline of more than $300m in new debt transactions, which it is aiming to complete in Q2.

 

Model portfolios launch

IAM launched a new revenue line via model portfolio service as an adjunct to its Managed Account Service which has FUM of $160m.

IAM said the service was immediately well received by investors and is a key offering to the advised market.

IAM said it allows financial advisors to provide investors with a portfolio of investments carefully monitored by funds management specialists and backed by internal and external research from BondAdviser.

 

Market conditions ideal for business

While inflation concerns and interest rate rises are hitting many businesses hard IAM

CEO Jon Lechte said fortunately this was not the case for IAM.

“We are not surprised by the improved performance as these market conditions are ideal for our business,” he said.

Lechte said he was particularly pleased with the growth in its debt capital markets pipeline.

“In very difficult market conditions in recent weeks, we have been able to place very significant bids into one of the largest investment grade transactions the market has seen, and we have also been able to complete raises for our corporate clients,” he said.

“This growth in both debt issuance and secondary trading is lifting IAM’s revenue and subsequently, we remain confident we will post a cash profit for the first half.”

Lechte said IAM was established to provide market leading infrastructure to both issuers and investors in the sub-institutional (sub $500m) transaction size.

“Our new issues are sold to investors only once we receive cornerstone support from our network of professional investors, to ensure all investors are buying at market levels,” he said.

Total Assets under Advice has grown in FY23 with Capital Markets more than $940m and Cash Markets has grown to more than $1.36bn, a record for the group.

 

This article was developed in collaboration with Income Asset Management, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.