In the group’s third quarter trading update, Formica said: “I’ve never known a competitive review to come out and say ‘it’s all fine’. However, he added that the recent comments from Tracey McDermott, acting chief of the FCA, which appeared to recognise that regulation had gone too far, were ‘refreshing’.
The update showed that while flows remained strong in the third quarter at £1.3bn, they were more than offset by market and FX losses of £1.9bn. As such, assets under management slipped from £82.1bn at the end of June 2015 to £81.5bn at the end of September.
Retail was stronger than institutional with net flows of £1.5bn. Global head of distribution Phil Wagstaff said that strong demand for the group’s European, absolute return and UK Property strategies had helped flows. He added that the group was also seeing improving flows into its strategic bond strategies. From here, the group plans to promote its global equity income and global emerging markets products.
The institutional business saw a small net outflow of £0.2bn. The group expects the institutional business to see similar outflows in the fourth quarter, following the planned roll-off of the private equity assets and a shift in allocation by a major institution. However Wagstaff said there was also good flows in the UK into outcome-oriented strategies in fixed income, such as diversified credit and total return bond.
The group said that investment performance had remained strong during the period under review, with 73% of funds outperforming their benchmark over one year and 82% over three years. Rob Gambi, chief investment officer, said the European strategies continued to perform well, with improvements in global equities, particularly global equity income. Fixed income also saw performance improve. Alternatives ‘did their job’ of preserving capital in a difficult market climate.
Numis said its ‘reduce’ rating was unchanged following the results. It added: “While the flow momentum in certain areas such as European Equities and Absolute Return remains decent, it remains questionable how long this trend can persist for. While the momentum is still positive, it has been steadily slowing since Q115. We think Henderson is the most vulnerable traditional asset manager to a market downturn.”
