Big asset managers exposed to equities are holding their own in stormy markets. Schroders (SDR) and Jupiter Fund Management (JUP) both managed to post end-of-September figures for assets under management, higher than those posted 12 months before. That is impressive given a terrible summer for growth stocks, as emerging market concerns collided with uncertainty over the future path of monetary policy. Even the much smaller Liontrust Asset Management (LIO) managed to grow this number at its half-year point - ended September - on the back of decent inflows.
In times of volatility (read: losses), asset managers encourage investors to take the long view. That is as much the case for a stockpicker holding equity in a listed manager as for the retail or institutional investor in one of that manager's funds. At times, that is a tough pill to swallow. Private investors with Schroders or Jupiter shares in their portfolio should be well aware of the high market beta, or correlation, of the shares.
Given that beta, it may be surprising such companies can better the performance of the FTSE 100 on a relative basis over 20 years, excluding dividends (see graph). Despite the recent impact of emerging market travails on Aberdeen (ADN), the manager has successfully managed to grow faster than the market since the turn of the millennium.
Meanwhile, Schroders demonstrated the characteristics that have led analysts at Numis to label it as "dull and boring". They mean that as a compliment, arguing its family-dominated ownership structure and diversified asset base delivers proven growth over the longer term. Since the financial crisis, the company has managed to put clear the air between itself and the FTSE 100.
As for the here-and-now, Schroders nearly escaped the £0.5bn net outflows that were the red mark on a decent Q3 trading statement. But for a day's delay to the arrival of an institutional mandate, management says that flow number would have been positive. The company could indeed shout about its profitability having grown its profits before tax and exceptionals by 12 per cent to £453m, as it managed to grow the top line faster than its expenses.
Despite losing some £142m of the institutional money between the end of June and the end of September, Jupiter more than offset this with £196m of net mutual fund inflows, particularly driven by retail investors continuing to head for European equity markets that have been propped up by central bankers' quantitative easing programmes.
But life was not so rosy at M&G Investments, the asset management thorn in the side of its life insurer parent Prudential (PRU) in its third-quarter update. Retail fixed income fund outflows amounted to £3.9bn on a net basis, lifting the net retail funds lost year-to-date to £7.3bn. Compared to inflows of £5.3bn in the same period last financial year, and the fact the group expects these market conditions to "persist", the market's negative reaction to numbers starts to make sense.
The indications are that retail investors are concerned about what a rise in interest rates would mean for their portfolios. A holder of an individual bond does not have to worry about how market yields will change if he or she intends to hold that bond to maturity. However, a bond fund investor is exposed to the fall in the value of the funds' holdings in a rising rate environment, where newer bonds are issued at better (higher) yields. This is what Prudential's management believes is encouraging investors to sell out now.
Prudential's rivals at Legal & General (LGEN) and Standard Life (SL.) are faring better - L&G's in-house fund manager grew its AUM by 8 per cent over the same time frame to £717bn, driven by pension funds wanting to 'derisk' their investment strategies. Standard Life saw strong inflows for multi-asset as clients sought to spread their bets.
