Royal London ‘low fee approach’ boosts net inflows

AUM hits £130bn helped by net flows into credit and sustainable products

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Royal London has reported its assets under management (AUM) came in at a record level of £130bn for the first half of the year, up from £114bn on 31 December 2018.

Net inflows for the group were 31% higher at £5.5bn, up from £4.2bn in its 2018 first-half results.

In a trading update on Monday, the firm said its AUM increase was largely fuelled by market growth of £10.5bn and net flows into its credit and sustainable funds, as well as large institutional business wins.

However, AJ Bell head of active portfolios Ryan Hughes said the firm’s low fee approach is likely to have played a part. “This is a strong set of performance numbers from Royal London with net flows looking very good.

“Importantly, Royal London have understood the importance of having a low fee approach which has resonated well with the market and at the same time they have backed in up with solid performance which is a very potent combination to help drive new business.”

Outstanding performance

Investment performance for the asset manager was also strong with 97% of active funds outperforming their benchmark over a three-year period, up from 58% during the same period last year.

The group also came second in the recent Pridham Report’s list of top 10 managers by net retail sales in Q2 2019.

Hughes said: “The results mentions good performance from their fixed interest capability and this is certainly an area where we rate them highly with both the Corporate Bond fund and Short Duration Global High Yield Bond fund in our portfolios.”

However, although EEV operating profit before tax was £187m, in line with the same period last year, it was largely offset by a reduction in life and pension sales which decreased 4% in H1 2019 to £5.8bn, from £6bn in H1 2018.

Royal London chairman Kevin Parry said: “First half trading was robust. RLAM won new mandates on the back of strong investment performance across asset classes. New business in pensions was marginally lower reflecting the industry-wide reduction in defined benefit transfers, offset by higher workplace sales. Consumer and protection traded in line with expectations, making excellent progress in the Irish market.

“Royal London is well prepared for Brexit and will continue to monitor carefully any developments that might affect our business and customers. We will keep customers informed of significant developments relevant to their policies.”

The group said it is looking forward to welcoming Barry O’Dwyer as group chief executive on 23 September 2019.”

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