getting beneath gross retail sales 2

One of the most interesting observations is the top ten managers by gross retail sales do not always make it into the top ten by net retail sales. The most obvious example of this is Invesco Perpetual, which has been second or third in terms of gross retail sales in each of the past six quarters. Despite this, it has only made it into the top ten for net retail sales in one quarter of the past six.

This shows the firm is good at attracting inflows, but also that it is plagued by a significant amount of redemptions.

In Q2, for example, Invesco reported £1.6bn in gross retail sales, placing it third out of 10, but it did not feature in the top ten managers by net retail sales. Number ten for net retail sales in the same period was Scottish Widows with £132m. This suggests Invesco came in lower than that for net retail sales, which would mean a difference of at least £1.46bn between its gross and net sales – not quite so impressive.

 Source: Pridham Report, Fundscape Q2 2012

To be fair to Invesco, even those who do manage to feature in both top ten tables see a marked fall from their headline (gross)figure, showing everyone is beset by withdrawals. It is certainly not alone in reporting far more impressive gross sales than net sales – Fidelity and Schroders are also frequently ranked in the top ten gross retail sales table and subsequently do not feature in the net retail sales table.

A spokesperson for Invesco noted the asset base should be considered when thinking about the amount of outflows, but it is not the only business to have amassed a lot of assets and M&G is not far shy of its total these days.

An interesting tack then is to look at those fund houses in the top ten for net retail sales punching above their weight compared to their ranking for gross retail sales. Presumably these firms have more modest inflows but also lower outflows, so potentially a more loyal following.

In Q2 2012 Cazenove, Kames, Axa IM and Threadneedle were all examples of this phenomenon – ranked in the top ten for net retail sales but not gross retail sales. All of these fund managers also reported an impressive first quarter for net retail sales, showing Q2 was not just a flash in the pan.

Back to the initial question then – What gives a better indication of an asset manager’s success and reputation in the market, gross or net retail sales? I’d go for the sticky money every time. Use the comments box below to let us know what you think…

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