M&G sees £3.4bn outflows amid fixed income slump

M&G saw £3.4bn in outflows for the first half of the year as the asset manager was hit by investors fleeing fixed income funds.

The results for the first six months of 2015 showed total outflows of £3.4bn, a dramatic swing from the £3.8bn of inflows seen at the same time last year.

Parent company Prudential attributed the shift to a lack of appetite for fixed income funds, and warned it expects this to further dampen profits in the second half of the year.

M&G recorded an operating profit of £251m, up 11 per cent on 2014’s equivalent figure of £227m, which the firm attributed to higher average funds under management.

Group chief executive Mike Wells says: “M&G, despite near-term headwinds, remains well-positioned to build long-term wealth for its customers.”

M&G’s full-year results, published in March, showed net outflows in the UK rose from £700m to £1.7bn for the year, having significantly dropped in the second half of the year. 

The asset management arm continued to see a drop in inflows from the UK market and steady outflows in the first quarter of 2015, however, it counteracted this with improved sales in continental Europe.

Prudential has recorded a 19 per cent increase in UK profits for the first half of the year despite the M&G outflows and tumbling annuity sales.

Overall pre-tax profits increased from £1.4bn to £1.9bn. The insurer’s UK life business recorded an operating profit of £436m, up from a restated figure of £366m, which has been amended to take into account the sale of its 25 per cent stakes in PruHealth and PruProtect in November.

The provider reported a continued slowdown in annuity sales, which contributed £66m to the UK earnings, down from £85m in 2014.

The retail business saw individual annuity sales drop 56 per cent from £63m to £28m. In its full year results in March, the firm said that profit from new retail annuities halved from £110m in 2013 to £57m in 2014.