PA ANALYSIS: Diversity the watchword as fund groups battle Brexit

The reason for this emphasis on diversification is that there is a recognition from all four CEOs that the uncertainty and volatility seen to date is likely to continue to have an impact on flows, particularly within their UK businesses. And, as is evident from the table below, the impact to date has been significant.

What is worth noting, however, is that while flows were down sharply overall, some areas still attracted significant inflows.

Jupiter, Henderson and Schroders all reported positive inflows into fixed income, while Henderson also reported a small positive within the alternatives space.

“Clients pulled back from investing in European assets and UK property, particularly after the referendum result, but we saw good demand for absolute return and income generating investment styles,” Henderson Global Investors CEO, Andrew Formica said.

These trends are indicative of the continued focus that clients have on income and, the fears that stem from the uncertain outlook predicted. The trick for all four managers is going to be ensuring that the funds that remain in demand outperform. A task made more difficult by the current landscape.

Because, as Jupiter CEO Maarten Slenderbroek explained for Jupiter [and the others] turning investment outperformance into flows is integral to its long-term growth strategy.

With the industry under continued pressure from passives, there is a growing tension in the active space between ensuring that one’s offering is diverse enough to withstand the sort of volatility thrown up by macro events like Brexit and the need to trim the ‘me-too product’ fat that will ultimately cost more than they are worth.

For now the focus is on the diversification element, but that too could shift.