Asset managers in the financial district of London (known as the ‘City’) are continuing to battle inflation, weak investor confidence and cost pressures, which are causing their clients to flee funds. Three major firms, Liontrust, Rathbones and Brooks Macdonald all issued trading updates this month for the three months ended 31 December, with all three struggling to hold on to client funds.
Liontrust reported net outflows of £1.7 billion for the quarter, with assets bleeding from all categories of funds, including the en vogue alternative space. Chief executive John Ions cited “ongoing negative sentiment among investors and the current challenges facing active asset managers.”
“These challenges include the fact that active managers have never been confronted by such a competitive environment to attract and retain assets as is the case now, both from within and outside the sector.”
The figures for Liontrust come as the firm continues to grapple with the aftermath of its failed bid last year to take over Swiss rival GAM. Liontrust tabled a £96 million bid for GAM in May, but only 33.5 per cent of GAM shares were tendered in support – falling short of the 66.6 per cent required.
The bid was consistently opposed by activist shareholder group NewGAMe, a consortium of investors controlled by French telecom billionaire Xavier Niel and his company Rock Investment. The group went on to take over the asset manager and replace its board.
GAM chief executive Peter Sanderson was replaced by New GAMe’s preferred choice, Elmar Zumbuehl. He was previously its chief risk officer and has worked at the Swiss asset manager since 2010.
Rathbones’ total net flows were flat in the quarter in wealth management, an area that many fund houses are looking towards for more sustainable revenues. Its trading update comes as it continues to integrate Investec Wealth & Investment UK, which it bought for almost £840 million in April last year. That firm saw outflows of £300 million in the final quarter of last year and “economic uncertainties are expected to persist in 2024”, according to the trading update.
Rathbones announced in September that chief financial officer Jennifer Mathias would step down from the board at the end of 2023. She is to take on a new position at the firm of group chief of staff, to support the Investec Wealth & Investment integration. She was replaced by Iain Hooley, who was previously Investec Wealth & Investment’s UK boss.
Overall net outflows at Brooks Macdonald were £100 million “during a challenging period for both the economy and the financial markets”. The company announced in October that it would cut around 55 roles. It said it expected to make 4 million in annual savings from the staff reduction.
Asset managers continue to face significant headwinds, however, persistent outflows and declining revenue mean some are struggling to generate decent levels of profit. UK-listed Jupiter Fund Management was one of those affected. It warned in a trading update earlier this month that it expects outflows for 2023 to total £2.2 billion.
Fund management bosses said in December that profitability would be a key theme shaping the sector in 2024. They said firms would need to balance the need to cut costs while also investing in growth areas like technology and fuel growth.
But there was some positive news in the January trading updates, as resurgent markets towards the back end of last year helped propel all three managers’ assets upwards. Liontrust ended the year with assets under management of £27.8 billion, up 0.6 per cent on the quarter. Brooks Macdonald was up 4.3 per cent to £17.6 billion and Rathbones was up 4.6 per cent to £105.3 billion. (The writer is our foreign correspondent based in the UK)
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