Fixed Income  

M&G hit by £1.2bn outflow from UK investors

M&G Investments suffered a £1.2bn outflow from UK investors in the first six months of 2013, according to parent company Prudential’s half-year results.

The group - which operates a series of major bond funds - generated net positive sales of £2.8bn in the same period in 2012.

The outflow comes after fixed income suffered a major sell-off in early 2013, with government and investment grade bond markets suffering sharp yield rises after the US Federal Reserve said it was set to start ‘tapering’ off its quantitative easing programme.

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M&G cited the implementation of the RDR in the UK as a factor in the negative sales, and also mentioned its decision to deter investment in Richard Woolnough’s Corporate Bond and Sterling Corporate Bond funds.

“In the UK after four consecutive calendar years and 15 consecutive quarters as the number one house for both net and gross sales, an unprecedented achievement, new business has slowed,” the results said.

However, while the group suffered negative sales in the UK it continued to enjoy strong sales in Europe, particularly on Mr Woolnough’s £15.2bn Optimal Income fund and Stuart Rhodes’ £7bn Global Dividend fund.

M&G’s overall net retail fund inflows totalled £4.8bn, the results said.

The fund manager’s assets under management grew by 15 per cent to £234.3bn, with more than a third now relating to business from the continent. M&G also increased its operating profit by 17 per cent to a record £204m over the course of the first half of the year.

The group announced last summer it had begun taking measures to slow the pace of inflows into the Corporate Bond and Strategic Corporate Bond funds, which currently have more than £10bn invested.

This has involved informal talks with key distributors about reducing the level of new inflows, but so far no formal measures, such as soft-closure, have been implemented.