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M&G experiences £1.2bn UK redemptions as bond bear bites
by David Campbell on Aug 12, 2013 at 09:39
More than a net £1.2 billion in UK assets exited M&G over the first half of the year as a growing bond bear market rattled investors at the business, which remains most well-known for its fixed income funds.
Strong equity market gains and a growing distribution base helped the business to increase its total retail assets over 12 months however, up 30% at £62.7 billion.
The company’s institutional division also reported net outflows of £900 million but reported funds under management up 20% over the 12 months to £55.5 billion.
‘This largely reflects the start of scheduled withdrawals from a single large but low-margin mandate of £7.6 billion received during 2012, M&G’s parent group Prudential said in a statement.
‘M&G currently has a strong pipeline of higher-margin institutional business. In particular, M&G has used its investment expertise to develop a number of products that allow institutional investors to take advantage of the gap created by the decline in long-term commercial bank loans.
'In the UK after four consecutive calendar years and 15 consecutive quarters as the number one house for both net and gross sales, an unprecedented achievement, new business has slowed. We have proactively decided to slow contributions to two of our market-leading corporate bond funds in the UK to protect their investment performance.'
The company added that the RDR had impacted on UK figures but that a growing distribution base, particularly within Europe, had helped to bolster overall assets.
Net European retail inflows stood at £5.6 billion. The company added that total non-UK assets had doubled over the period to £21.2 equivalent to 34% of retail funds, compared to 22% previously.
While the company attributed the gains over the period to a 14% increase in equity prices and an 8% increase in bond prices, it did not offer figures for the six month period since fixed income peaked.
Underlying profit at the company rose by 16% over the first half to a record £195 million.
‘Looking ahead, M&G will continue to seek diversification by both asset class and geography, while remaining focused on delivering excellent investment performance and service to its clients,’ the company added.
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