As the latest Pridham Report points out, M&G retained the top spot with net retail sales of £2.6bn last year, despite reduced flows into its bond funds. In Q4, as the trend turned away from credit and back to equities, M&G still registered gross retail sales of £2.1bn; however, it didn’t even make the top 10 on a net basis.
The Richard Woolnough-led £6.4bn M&G Corporate Bond and £5.8bn Strategic Corporate Bond Fund vehicles could be the most hit if investors do decided to exit credit on mass, though the report singles out the continuing popularity of Optimal Income and Global Dividend funds.
It was actually Standard Life Investments that topped the net retail sales rankings in Q4, and achieved record sales for 2012 as a whole, just behind M&G at £2.5bn. However, the firm relies heavily on its £14bn GARS vehicle which, despite its ongoing popularity, also has its dissenters.
One of these is Jeremy Beckwith, CIO at London Wall Partners, who opines: “We have not gone into that fund, partly because they lost a lot of people earlier this year and partly because the strategies they actually employ are actually quite difficult to explain to end clients.
“I think the risk control within the fund at an institutional level is brilliant, but being able to explain what they do to an end retail client is a trickier thing. The strategy has also got so large that it must start to impinge on their ability to deliver returns at some point.”
Presuming markets continue in their current direction, the real winners this year may well be those groups that can offer equity products that can add genuine alpha.
The Pridham Report picks out Schroders, making its way back into the top ten in part due to the success of its Asian products, such as Asian Alpha Plus and Tokyo funds, while Jupiter will be looking to profit from investors’ growing interest in Europe. It has recently changed the mandate for its European Income Fund to allow it a global investment universe as well as changing its management team.
As the sales success of the likes of Standard Life GARS and M&G Optimal prove, innovation is key to building inflows, but maybe it’s time for some new initiatives in risk assets.
