M&G has reported a net retail outflow of £4bn for the three months to June 30, constituting £2.6bn in European retail outflows and £1.4bn in redemptions from its UK business.
Outflows were “a consequence of softer sentiment on fixed income assets”, Prudential group chief executive Mike Wells said in the insurer’s interim results this morning.
The figures follow on from a £900m net outflow from M&G’s UK retail business in the first quarter. Notably, the £2.6bn in European retail redemptions marks a sharp reversal from the £1.5bn in net inflows seen in Q1.
External assets under management at M&G fell from £139.5bn as of March 31 to £133.4bn as ofthe end of June.
The second quarter struggles meant the fund group suffered net retail outflows of £3.4bn in the first half of the year, compared with a net inflow of £3.8bn in H1 2014.
The fund giant’s operating profit rose 11 per cent year on year to £251m in the six months to June 30 despite the redemptions, Prudential said.
Richard Woolnough’s Optimal Income fund is among those to have seen assets slump in the second quarter, according to Morningstar data, as investors turn more cautious on bond portfolios.
Prudential added today it expects this negative sentiment “to continue into the second half of the year”.
Equity funds such as Stuart Rhodes’ Global Dividend portfolio have also shed assets in recent months, but the insurer said M&G had been supported by “good net inflows” into several multi-asset products.
“M&G remains well placed to service clients thanks to its long-held strategy of diversification by asset class, product and geography and its focus on long-term investment performance,” Prudential said.
