Somerset has reported net profits of £9.7m in the 12-month period ending 31 March 2021, a 35% drop from 2020’s £14.9m, with assets under management jumping to $7.3bn from the $5.6bn recorded at the end of March last year.
Revenues decreased by 18.69% relative to the prior year as the company admited that its biggest risk “is loss of reputation resulting from poor investment decisions”, alongside credit risk arising from trade debtors and cash held in banks and liquidity risk that cash is insufficient for it to meet obligations.
The firm said the profit for the year was reduced “primarily because of lower management and performance fees” for the period. There was also a “small fee increase” in costs driven mostly by staff hires in the corporate member leading to “higher service management fees.”
Somerset has added two new teams to its ranks over the past 12 months: the Asia Income team led by Mark Williams and China team led by Min Chen.
Dominic Johnson, CEO & founding partner, said: “Emerging Markets and Asia always have challenges and risks but that is what makes them such an exciting asset class for active managers. We are particularly optimistic about our Asia Income Strategy which has continued to perform strongly since Mark Williams and the team joined in October last year.”
The firm warned it expects profitability to decrease even further due to the global pandemic and its ability to “market its investment strategies to clients and raise new assets”. Still, Somerset believes it will “remain profitable” and will reap benefits from both the ongoing recovery in global markets and the new strategies it launched in the second half of 2020.
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