Citywire for Financial Professionals
Stay connected:

View the article online at http://citywire.co.uk/money/article/a888262

Investors pull £11bn from M&G amid bonds sell-off

Country's biggest bond manager saw retail investors pull £10.9 billion from its funds last year amid fixed income sell-off.

 
Investors pull £11bn from M&G amid bonds sell-off

Investors pulled £10.9 billion from funds run by M&G Investments last year, as a sell-off in the bond markets strengthened.

The country's biggest bond fund manager was hit by a steady flow of retail investors out of some of its big fixed income funds throughout 2015, which saw a spate of heavy sell-offs in bonds.

M&G said the outflows 'reflected the continuation of a market-wide change in investor sentiment away from fixed income, against a backdrop of high levels of volatility and macroeconomic uncertainties, conditions that have continued into the early part of 2016'.

Although it did not name specific funds, chief among the victims is likely to have been M&G Optimal Income , run by Richard Woolnough (pictured), which has shrunk from £24 billion a year ago to £15 billion.

Figures from Morningstar show the fund's pain has continued into 2016, with £864 million walking out the door in January as investors withdrew the biggest amount of money from funds since the financial crisis.

'Commentators have been forecasting the bond apocalypse for six years now, yet the asset class has confounded predictions, with prices driven up by falling interest rates and macro-economic worries that simply won't go away,' said Laith Khalaf, senior analyst at Hargreaves Lansdown.

'However 2015 saw the first interest rate rise in the US for nine years, and some investors have clearly taken this as a sign that the end of the bull run in bonds is nigh.'

The outflows are unlikely to have been confined to the group's bond funds either. M&G has two large funds that have fallen from former glories, the Recovery fund run by Tom Dobell and Global Basics , handed to new manager Jamie Horvat at the end of last year.

Both have shrunk in size at a rate exceeding losses made over the course of the last year, with Recovery, which stood at £5.1 billion at the beginning of last year now housing £3.4 billion and Global Basics down to £1.7 billion from £2.5 billion over the same period. 

3 comments so far. Why not have your say?

Michael Meredith

Mar 09, 2016 at 18:20

Apologist funds like Recovery can't survive on jam tomorrow promised for many years...there are more fish In the sea...

report this

Frank Frank

Mar 09, 2016 at 18:32

Sic transit gloria mundi.

I hope the fund managers made their pile while the going was good and can now retire and live in the style to which they have been accustomed. The Ritz hotel, black caviar and pink champagne.

report this

Michael Meredith

Mar 09, 2016 at 18:39

I do think some managers rely on the inertia of their investors who are committed to brand, they tend to be more elderly and more vulnerable to change, this is not a business to sit on your eggs for too long or they fail to hatch!!

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

Sponsored Video: The sterling slump: what’s next?


After Boris announced he was backing Brexit, sterling suffered its biggest slump in six years. Our Market Mavens discuss. Follow the Market Mavens LinkedIn page for weekly videos, in which our panel of industry experts share their views on financial news

More about this:

Look up the funds

  • M&G Optimal Income A Inc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • M&G Recovery A Inc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • M&G Global Basics I Acc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the fund managers

  • Richard Woolnough
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Tom Dobell
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

More from us

Archive

Today's articles

Tools from Citywire Money

From the Forums

+ Start a new discussion

Weekly email from The Lolly

Get simple, easy ways to make more from your money. Just enter your email address below

An error occured while subscribing your email. Please try again later.

Thank you for registering for your weekly newsletter from The Lolly.

Keep an eye out for us in your inbox, and please add noreply@emails.citywire.co.uk to your safe senders list so we don't get junked.

Read more...

The Expert View: BP, Travis Perkins and Asos

by Michelle McGagh on Jul 01, 2016 at 05:00

Sorry, this link is not
quite ready yet