U.S. Global Investors, Inc. ( NASDAQ: GROW), a boutique registered investment advisory firm specializing in natural resources and emerging markets, recorded net income of $749,518, or 5 cents per share, on revenues of $7.79 million for the quarter ended September 30, 2011.
This compares to net income of $1.27 million, or 8 cents per share, on revenues of $8.92 million for the first quarter of fiscal year 2011. The year-over-year decline in revenue of $1.13 million is primarily attributable to a decrease in unrealized gains (losses) of $1.05 million in trading securities, including funds managed by the company, which impacted the change in earnings by $0.04 per share. This is a reflection of short-term swings in asset prices. Unrealized losses do not impact cash flows until realized or sold. This was slightly offset by a decrease in expenses of approximately $332,000.
Assets under management stood at $2.05 billion as of September 30, 2011, a 21.9 percent decrease from $2.62 billion at September 30, 2010. According to data from the Investment Company Institute (ICI), investors pulled more than $70 billion from equity mutual funds during the quarter. This represents the largest withdrawal of assets over a three-month period since the depths of the financial crisis in fall 2008.
Average assets under management were $2.45 billion for the quarter ended September 30, 2011, relatively flat from the same quarter a year ago. Sequentially, average assets under management decreased 15.0 percent from the previous quarter in response to global markets enduring the worst declines in three years. The MSCI Emerging Markets Index decreased 22 percent during the quarter, and the Morgan Stanley Commodity Related Equity Index, which tracks a basket of commodity-related equities, decreased 24 percent.“Roughly 80 percent of U.S. Global’s assets under management are in emerging markets and natural resources-related equities,” says Frank Holmes, U.S. Global Investors CEO. “High volatility in these asset classes is normal and expected in our business.”