Poor old F&C – first it has had to deal with the resignations of two of its higher profile managers in Jeremy Tigue and Ted Scott, and then reported more than £20bn outflows as the contractual terms with its strategic partners came to an end.
The business has been in a constant state of flux since its acquisition of Thames River Capital and hopefully under new parent Bank of Montreal some stability will return to the ship.
Elsewhere this week, M&G reported a £700m net outflow, which it termed “modest”. Normally that would seem ludicrous but when your external AUM sits at £126bn, I guess the term is appropriate, relatively.
Multi-skilled giant
Always seen as something of a multi-skilled giant, M&G has been top of many a table for the last few years. Its record operating profit of £395m, up 23% on last year, was down to “continued strong third party net inflows combined with favourable market movements” and externally managed funds swelled by £14bn.
The stemming of inflows to Richard Woolnough’s Corporate Bond and Strategic Corporate Bond funds in 2012 was blamed for the group’s significant (by most people’s standards) outflows, contributing to a slowing UK business after four consecutive years of dominating retail investment business.
Ben Yearsley, head of investment research at Charles Stanley Direct believes the story may be getting tired.
“High yield had a great year last year but the rest of the bond market doesn’t look all that exciting. People might be getting bored [with] bonds but also I think the market is getting very sceptical of funds that are considered too large. It’s definitely something to be wary of – not just for bond funds, but in general.”
He points to Woolnough’s Optimal Income Fund, which stands at around £17bn in assets.
“That is a huge amount of money, by anyone’s standards.”
Looking beyond the bond fund?
Gilt investors are braced for one of the worst years of performance on record, apparently and houses that are have been pushing the bond story, like M&G, like Invesco Perpetual, may want to watch being overly reliant on an asset class that was heading for a change in fortune.
Invesco especially so now, no longer able to lean on Neil Woodford’s franchise for support.
That said, newly voted 'Best Large Bond Group' by Thomson Reuters at the annual Lipper Fund Awards, Axa Investment Managers took in more than £10bn of net flows in 2013, a huge year-on-year increase, and thanked its fixed income teams for a large part of it, especially its high yield and investment grade credit and short-duration strategies as investors remain concerned about inflation.
In a well-timed move, M&G may be turning its attention elsewhere.
Today journalists received a wonderfully presented (read = expensive) golf ball atop a bit of AstroTurf celebrating three years of “on target” numbers of its multi-asset Episode Income Fund, alongside a promotional competition to give away an electric golf trolley.
Knowing their audience? Absolutely.
Perhaps this is a two-pronged objective – the opportunity for manager Steven Andrews to build his profile to that of his exceptionally well-received predecessor David Jane (who left in 2010, subsequently setting up Darwin) and directing investors’ attention elsewhere in M&G’s fund stable.
