Multi-asset pushes Rathbones up the ranks in latest Pridham Report

Legal & General Investment Management and Rathbones are among the asset managers benefiting from advisers outsourcing in a difficult Q3 for fund manager flows as the investment industry takes a hit to its reputation from Neil Woodford’s public fall from grace.

Passive giants Blackrock and LGIM enjoyed the largest gross and net retail sales, according to the latest Pridham Report, although both also saw net inflows into actively-managed funds too. Blackrock’s European Dynamic and Absolute Return Bond funds both buoyed net flows, while LGIM’s actively managed Multi Index funds benefited from cost-conscious investors outsourcing.

Blackrock took in net flows of £1.7bn and LGIM raked in £886.1m.

The report said negative publicity surrounding Woodford Investment Management has made advisers and investors more risk averse. In October, the BBC shone a very public spotlight on the funds industry in its Panorama programme, which looked primarily at the Woodford implosion.

Rathbones also benefited from adviser outsourcing with its Multi-Asset Portfolio funds proving popular with advisers. It rose to seventh position in the net retail sales table after seeing a 19% increase in its UK fund sales in Q3. It took in £320.9m net flows.

In October, Rathbones announced operating margins will fall to “mid-twenties” in its two-to-three year plan to improve organic growth across the business.

Strong sales into the Rathbone Ethical Bond fund highlighted another trend over the quarter with ESG sales supporting asset managers during an otherwise difficult period.

Royal London Asset Management and Liontrust also benefited from this trend. Two of RLAM’s top funds for net sales were RL Sustainable Diversified and RL Sustainable Leaders, while Liontrust Sustainable Future Managed is one of its best sellers.

Both groups report increasing interest from advisers in sustainable investment, the report said.

Helen Pridham, editor of The Pridham Report said many investors and advisers are waiting for greater certainty with the report highlighting that Brexit still continues to weigh on flows. “Until then lower risk funds are likely to be favoured. Multi-asset funds will be among the few winners. Those with sustainable objectives may well be at an advantage.”

Another Brexit extension and an election in the fourth quarter will not help fund managers, the report said.

Source: The Pridham Report