It’s fair to say asset managers are under the cosh as market conditions remain volatile and regulatory pressure bears down on transparency around performance fees. For many of the industry’s UK-listed players, that resulted in hefty net outflows and negative investment returns during the final quarter of 2018. In fact, funds under management across the UK investment industry declined for the first time in seven years in 2018, according to the Investment Association.
Against a slew of earnings downgrades by City analysts, shares in UK-listed asset managers have unsurprisingly deteriorated during the past nine months, with most underperforming the FTSE All-Share Index. And given the sector’s reputation as one of the most cyclical on public markets, concerns around Brexit-related disruption and slowing global growth may continue to suppress appetite for the shares.
Jupiter Fund Management (JUP) suffered the largest annual decline in assets under management (AuM)among its peers last year, reporting four consecutive quarters of net outflows – amounting to £4.6bn – by the end of December, with the final three months representing the biggest outflow so far at £1.5bn. Almost all last year’s outflows came via mutual funds, with its fixed-income strategy responsible for the lion’s share of lost business. During the first half of the year alone, the Dynamic Bond Fund – which accounted for 15 per cent of assets under management – suffered £2.3bn in net outflows, as investors became increasingly unnerved by global central banks signalling the end of the quantitative easing programmes that have buoyed bond share prices since the 2008 financial crisis.