CompaniesJul 28 2016

Henderson outflows hit £2bn after property fund saga

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Henderson outflows hit £2bn after property fund saga

Investors pulled billions from Henderson funds in the first half of the year after the asset manager was forced to suspend trading in its £4bn property vehicle due to the hefty amount of redemption requests.

The fund house today (28 July) revealed it had a rocky six months as outflows topped £2bn, causing pre-tax profits to slip to £100.5m, compared with £117.4m in the same period a year ago.

After the EU referendum on 23 June, some investors backed out of the Henderson Property fund, which meant the firm had to pause trading as it looked to “safeguard the interests of all investors”.

Andrew Formica, chief executive of Henderson, said the first half of 2016 was dominated by widespread market uncertainty in the run up to the European Union referendum.

But despite the dip in profit, Henderson announced it would increase its interim dividend slightly to 3.2 pence per share, from 3.1 pence per share at the end of June last year.

According to the company’s half-year results, ending 30 June, Henderson also saw a 3 per cent jump in its assets under management, hitting £95bn from the £92bn reported at the end of December 2015.

Mr Formica said, while clients pulled back from investing in European assets and UK property after the referendum result, Henderson did see good demand for absolute return and income-generating investment styles.

He also pointed out outflows across its retail product range have moderated and investment performance has improved since the end of June.

Henderson is currently in the middle of its five-year growth and globalisation strategy, and Mr Formica said the business is “fundamentally stronger” as a result.

“The dislocation caused by the UK referendum result demonstrates the importance of continuing to diversify our business,” he said.

“Our plan is to stay close to our clients, stay vigilant on costs and stay true to our strategy.”

Gary Millward, financial consultant at Alan Steel Asset Management, said £2bn of outflows for a fund group of Henderson’s size does not concern him.

“We would only have concerns if these flows were concentrated within a specific fund that we were heavily invested in that resulted a big decrease in assets under management which would then magnify trading costs and impact greatly on headline performance.

He said a slip in pre-tax profits doesn’t concern him either, adding Henderson’s business still looks in good shape.

Commenting on the property fund position, he said he has held very little in property over the past few years because of the current situation investors face.

“An illiquid asset class within a liquid legal investment structure is always going to be a problem during periods of market stress, and moving away from a daily dealing structure would be sensible.”

Mr Millward also said he thought the property panic is overdone and will settle through the rest of the year.

katherine.denham@ft.com