Premier Asset Management has warned that future flows into its funds could be weaker if Brexit negotiations plunge the UK economy into a “period of prolonged protraction”.
The warning from the Aim-listed asset manager comes as it unveiled its annual results, which showed outflows from its products had intensified year-on-year.
Redemptions for 2018 hit £1.5bn up from £1.4bn in 2017.
Although the fund group saw net flows of £734m for the year, this was weaker than the £747m in fund sales it took in over 2017.
It closed out the year ended 30 September with £6.9bn in assets under management, up 12% from £6.1bn in 2017.
But in the intervening months after the reporting period total assets shrunk as markets were rocked by a global sell-off. This left Premier with £6.6bn in assets as at close of business on 23 November.
Brexit weighs on future flows
Chief executive Mike O’Shea (pictured) blamed weaker sales for the year on uncertainty surrounding the Brexit negotiations which created “a more volatile and difficult environment for the investment industry”.
Looking ahead he said it was possible that the UK’s divorce from the EU could lead to “very difficult economic circumstances” punctuated by poor investor confidence and continued volatility in the pound.
This could impact on future flows into Premier’s funds, he said.
But he downplayed the impact a more volatile British economy would have on the firm’s products. Many Premier funds have the flexibility to be partly, mainly or wholly invested outside of UK listed investments, he noted.
Likewise O’Shea said that despite a more challenging environment performance across Premier funds, particularly its multi-asset range, had “remained resilient on a relative basis”.
“We are confident that in a more difficult investment environment, there will continue to be strong demand for good actively managed products, including both multi-asset and single strategy funds,” he said.
No change in strategy
O’Shea said the prospect of a “no deal” Brexit would not prompt a change in the firm’s existing business strategy.
Similarly a “no deal” outcome does not pose a significant risk when it comes to attracting and retaining managers and talent from Europe, he said.
Around 5% of Premier’s employees are currently from non-UK countries in the EU.
“In an ideal world, the board would like the group to have the ability to recruit from as wide a pool of talent as possible, from both within the EU and further afield,” he said. “However, taking into account the overall size of Premier, the board does not feel that a “no deal” Brexit creates significantly increased risk for the business in the area of recruitment and retention.”