Fixed IncomeMay 7 2013

M&G notes outflows driven by bond fund exits

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M&G’s assets under management hit a record high at the end of the first quarter of 2013 in spite of a high level of outflows driven by the company’s decision to slow inflows into Richard Woolnough’s giant Corporate Bond and Strategic Corporate Bond funds.

According to parent company Prudential’s first quarter statement, M&G recorded net retail inflows of £2.4bn, up from £1.7bn in the last three months of 2012, helping boost its assets under management to £238.4bn.

However, Prudential said this was boosted by record inflows of £2.9bn from European investors, offsetting outflows from the UK side of the business. The company said M&G had experienced £4.8bn in redemptions on the retail side of the business, but this was offset by £7.2bn of inflows.

“A significant portion of these UK outflows result from our decision in summer 2012 to slow contributions into two of our market-leading corporate bond funds,” the company said.

In July last year M&G announced it was exploring options to reduce inflows into the two corporate bond funds run by Mr Woolnough. The manager is responsible for roughly £25bn in fixed income assets including the £13.4bn M&G Optimal Income fund.

Although it has yet to publicly announce specific measures such as soft-closing the funds, M&G has been contacting larger clients in an effort to slow inflows. Two months after July’s statement the funds were cut from Hargreaves Lansdown’s Wealth 150 list of recommended funds.