PA ANALYSIS questionable headline numbers

A look at the IMA’s UK retail figures over the last three years and one year has thrown up some interesting stories. Sadly, very few of the groups involved have been keen on getting involved in justifying their flows from either perspective.

PA ANALYSIS questionable headline numbers


One would have thought that those companies who have had major turnarounds in fortune (Fidelity, anyone?) might have been somewhat more forthcoming in explaining their recent success.

That particular group, for example, were once upon a time languishing down the leader board with the third-biggest losses over three years – more than £1.5bn or 5.9%. Taking their one year numbers however, which show a 6.1%, or £1.68bn rise in funds under management, sitting at £28.74bn to end December one was keen to understand the driving factors.

While market movement can be blamed to an extent, there are obviously more bespoke factors at play otherwise each fund house with a particular sector specialism would demonstrate ebbs and flows at similar times.

Unique offering?

Ignis has seen exceptional inflows into its Absolute Return Government Bond fund since it launched a couple of years ago, taking in more than £2bn to date. Since launch the fund has delivered a 20.3% total return.

Apparently, the fund is one of the most successful launches in the UK retail fixed income space ever, and those supporting the fund have preferred it to other high profile absolute return products for a) its focus on the more liquid government bond sector and b) it not facing issues over accessibility and transparency.

Over three years to the end of December, Ignis saw a 0.6% net UK retail dip in funds under management, whereas its one year figures showed a 4.7% increase. The group jumped up from one of the greatest losers to a significant winner – mainly thanks to the latest launch.

Its property franchise has also fared well, but against the backdrop of a strategic overhaul and greater attention paid beyond the UK, Ignis claims the numbers cited might not show the full picture. To end December 2013, assets stood at just over £21bn.

James de Bunsen, a member of the multi-manager team at Henderson Global Investors, holds the fund as his biggest position – 6.7% in his £180m Absolute Return Fund, claiming it to be pretty unique in the Ucits arena.

“Aside from performance, we like it because it is totally uncorrelated to other asset classes, to gilts. The focus on highly liquid government bonds and the team’s risk management approach mean it can be very responsive."

Legal & General Unit Trust Managers have demonstrated a 3.8% fall in FUM over three years, with a hefty pickup over 12 months, growing 12.1% to £23.56bn.

While in a closed period, and therefore only able to discuss figures to Q3 2013, a spokesperson said: “We predicted that during the recession investors may be looking at short-term liquid savings products rather than unit trusts and as we said at that time we expect some of those investments to gradually return when the economy begins to turn.

“We have made a number of positive developments which we believe will manifest in strong growth. These include strengthening our sales team, the re-pricing of our index products, the launch of the multi index range of funds along with our strong fixed income and active strategies. Our excellent index range has gained considerable traction over the last few months as more Discretionary firms are looking to diversify their portfolios post RDR.”

Sustainable success?

Meanwhile M&G has enjoyed an exceptional growth rate, with a 31% rise in FUM over three years – taking in more than £13bn over the period – has seen its meteoric rise slow somewhat.

Arguably that is understandable as such unprecedented growth could be hard to sustain – especially given market conditions over the last few years.

“During the first half of 2013 we have witnessed a slowdown in the amount of new business. New business has slowed, partly because of our decision to slow the pace of new money into two of our corporate bond funds to protect their investment performance,” the group explained.

It said net retail fund flows were £4.8bn over the first half of the year, principally through continental European sales, which increased more than 2.5 times over the period.

Over the last year, it said eight funds attracted net sales of at least £150m each with the majority of new money going into the M&G Optimal Income Fund, a flexible bond portfolio, and into the M&G Global Dividend Fund.

“M&G’s sales in the UK stabilised during the second quarter with overall net outflows of £1.2bn in the first six months compared with inflows of £2.8bn the previous year. The implementation of the RDR at the start of the year has also contributed to dampening activity across the industry.” 

Insight Investment, part of BNY Mellon Asset Management, is reported to have enjoyed a 13% rise in retail FUM, from just over £3bn to just over £3.5bn over three years. Significant inflows appear to have taken place, with the one year figure showing almost £4.5bn of FUM, but then this dropped off, returning to approximately £3.5bn, with Insight showing the biggest losses of all UK groups over one year.

But, again other factors are to be taken into consideration – and perhaps even more complex at multi-boutique outfits, such as BNY.  With the acquisition of Insight, the distribution of assets will have been reported differently, with BNY Mellon picking up a sizeable chunk.

Bottom line, look beneath the headline numbers as everything isn’t necessarily as black and white as it appears in, erm, black and white.


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