Henderson profits boosted by 5bn in net inflows

Despite a 16% increase in underlying expenses, the asset manager remains positive about the second half as retail net inflows continue to grow.

Henderson profits boosted by 5bn in net inflows

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Henderson reported net inflows of £5bn during the period, dominated by retail client net inflows of £4.7bn, compared with £600m in the comparable period last year as new mandates outpaced redemptions from existing funds.

Of note was the performance of the group’s SICAV range, which accounted for 45% of net retail inflows.

But, Henderson said, “SICAV inflows slowed in the second quarter, largely driven by reduced demand for the Henderson Horizon Global Property Equities Fund, as well as a modest industry-wide reduction in net flows into European Equities from the elevated levels of 4Q13 and 1Q14.”

But, it said, it continues to see strong demand for a broad range of European equities products with content tailored to individual European jurisdictions.

On the UK front, increased flows in the second quarter, were driven by continued demand for a broad range of products the group said, including its cautious managed, absolute return and property funds. Flows from the institutional space improved to £300m, from the £2bn in outflows reported in the six months to June 2013.

“Institutional flows remained marginally positive despite known maturing mandates,” the group wrote in the commentary to the results, adding: “Institutional inflows are becoming increasingly global, with mandates funded in the period in the US, Australia and Japan as well as the UK."

Andrew Formica, Henderson CEO, said the group has begun to see early results from some of its previous investments, including mandate wins for its Global Equities strategy and strong first year performance from its US high yield team.

“We continue to add resources in investment management and distribution and are enhancing our global platforms. I was delighted to be able to announce the acquisition of Geneva Capital Management at the end of June, to add US equities capability to our business and extend our US institutional client base,” he added.

At the end of June, assets under management were £74.7bn, down £6.7bn year-on-year, largely as a result of a series of property transactions that saw it transfer its European and Asia-Pacific based real estate businesses into a joint venture with and sell its North American property business to TIAA-CREF.

However, the group reiterated its goal of doubling AUM by 2018 from a starting point of £63.7bn as of the end of 2013.

Looking ahead, Henderson said it is currently seeing strong growth momentum with both investment performance and flows in positive territory.

“The second half has begun well, although we expect a slowdown in flows during the summer holiday season and more generally in the US, after an exceptional start to the year.”

For the period, net underlying income from continuing operations for the period rose 11% to £261.9m, while management fees increased to £193.7m.

“Performance fees, at £45.2m, reflected strong investment returns, but were lower than 1H13, reflecting lower overall levels of market appreciation,” it said.

 

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