A St James’s Place mandate has reportedly helped buoy Impax Asset Management flows during the coronavirus market sell-off as it becomes one of the first UK asset managers to publish a trading update for Q1 2020.
The environmental fund house, which had suffered 20% share price drops over the last month, raked in £1.1bn over the quarter, representing 6.5% of opening assets under management. In March, its funds took in £6m.
Despite inflows, market movements saw AUM fall 11% to £14.4bn. Shares in the Aim-listed boutique fund house rallied 8.33% on the results.
Impax chief executive Ian Simm (pictured) said the fund house has almost no financial exposure to distressed companies. “The companies that we invest in are generally well established with experienced management teams, diversified business models and strong balance sheets.”
Simm anticipated interest in strategies to provide exposure to companies mitigating and adapting to climate change and reducing pollution would continue to attract interest from investors once the coronavirus crisis was over.
> See also: Tumbling asset management stocks prompt comparison with banks during financial crisis
SJP and pension mandate buoy sales at Impax
St James’s Place’s mandate with Impax has grown strongly over the period, contributing to solid flows figures given the backdrop, said Peel Hunt in an analyst note. Impax snagged the mandate from Aberdeen Standard Investments in late 2018.
The note suggested the flows figures also included a mandate from the West Midlands Pension Fund.
Peel Hunt forecasts net flows of £0.5bn for the remaining two quarters that make up Impax’s full year.
It noted Impax’s valuation placed it at the top of the sector but argued this was justified. “We expect client demand for Impax’s range of sustainable funds to remain high, which will drive inflows from a strong and diverse range of clients and channels, and therefore likely earnings upgrades as markets return to normality,” said analysts Stuart Duncan and Robert Page in the note.
Some factors could aid fund houses for Q1 2020 updates
Willis Owen head of personal investing Adrian Lowcock expected other asset managers might not fare so well in their Q1 2020 results, pointing out Impax funds are unlikely to be core holdings for many investors and also that people who invest ethically are not likely to do it for the short term. “These are not the funds you would look to sell first in a market rout,” said Lowcock.
Boutiques in out of favour areas such as value, smaller companies or income are the asset managers most likely to feel the heat in their Q1 updates, Lowcock said.
The bullishness of investors at the start of the quarter and the end of tax year may also mean outflows across the board are not as bad in Q1 2020 as anticipated, he added.
Tilney managing director Jason Hollands said although business flows matter, it is more important to look at overall AUM, which in the case of Impax failed to offset net inflows.
Hollands said: “The most vulnerable groups in terms of potential AUM attrition will be those with high exposure to long-only equities and retail investors. Fund businesses with substantial exposure to fixed income, alternatives and long-term institutional mandates, such as insurance funds, will have more resilient assets under management.”
