M&G sees £32bn gross outflows as investors ditch fixed income

Portfolio-Bonds-Fixed-Income-Performance-UK-700x450.jpgM&G has been hit by £32bn of gross outflows last year, leading to £10.9bn of net outflows as retail investors moved away from the asset manager’s bond funds.

In its full year results for 2015, released today, the asset management arm of Prudential said it saw net retail outflows of £10.9bn “due to redemptions from bond funds reflecting softer consumer sentiment on fixed income assets”.

The retail business saw £32bn of gross outflows over the year, which more than cancelled out the £21.1bn of gross inflows in the period.

Gross inflows for the institutional and retail business combined were £33.6bn, but gross outflows of more than £40bn led to net outflows of £7bn across the businesses.

Total funds under management at M&G were down 7 per cent over the year, standing at £246.1bn, while retail funds under management fell 18 per cent to £60.8bn.

In the final quarter of 2015 M&G saw net retail outflows of £3.5bn, which the business puts down to a move away from fixed income, high volatility and macroeconomic uncertainty. It adds that these conditions have continued into 2016, hinting that the first quarter results may also see outflows.

The asset manager says it is focusing on diversification and saw £2bn of net inflows to its multi-asset funds and £500m of net inflows to its property funds.

“After a period of exceptional growth, M&G had a more challenging year with retail net outflows more than offsetting positive flows from institutional new business,” says Mike Wells, group chief executive.

“Despite outflows in 2015, M&G’s total funds under management have grown from £198.3bn at the end of 2010 to £246.1bn at the end of 2015, reflecting M&G’s continued focus towards innovation and asset class diversification.”

Operating profit at M&G stood at £442m, being broadly flat with 2014’s profit.

Chief executive Michael McLintock announced his departure from M&G earlier this year, with Aberdeen Asset Management CIO Anne Richards to replace him in June.

Eastspring Investment, the Asian asset management business owned by Prudential, saw net inflows of £6bn over the year, up on last year’s £5.4bn.