M&G sees £7bn outflow and profit dip

Added 10th August 2016

Prudential owned M&G Investments recorded £7bn in net outflows over the first half of the year, and saw a 10% slide in profits.

M&G sees £7bn outflow and profit dip

While Prudential posted 9% profit growth thanks to its Asian enterprises, M&G profits crumbled under the weight of £7bn in outflows accumulated since the second quarter of 2015.

Though the asset manager saw inflows of £9.7bn by the half year point, this was offset by redemptions of £16.7bn.  

Redemptions from M&G’s retail platform led to a 14% decline in total retail assets under management, which pushed operating profits down to £225m from £251m.

In Tilney Bestinvest’s latest edition of “Spot the Dog,” M&G was named and shamed as the firm with the highest number of assets in underperforming funds for the fourth time consecutively.

M&G’s £1.8bn Global Basics fund and £5.48bn Global Dividend fund were spotlighted as two of the culprits responsible for keeping the asset manager in the doghouse.

Graham Mason, CIO, said that while the funds had suffered in previous years, both were in the process of turning things around.

In the meantime, Prudential said the level of redemptions experienced in the first half of the year “will continue to put downward pressure on revenue prospects for the remainder of 2016.”

The insurer added that although net outflows are “likely to impact short-term earnings prospects, M&G remains a highly regarded franchise and the skills and capabilities that saw external assets under management double between 2008 and 2015 are very much intact.”

“Anne Richards, who joined us in June following her appointment as M&G chief executive, is already working closely with the executive team to improve performance and address the operational impacts of the outcome of the UK referendum on EU membership,” Prudential stated.

Despite the performance of its asset management arm parent company Prudential’s shares rose 1.4% on Wednesday to 1411p.

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