While Table 2 contains some repeat offenders (HBOS, BNY Mellon and First State all featured last year), there are also some falls from grace. One is M&G, which last year ranked as the most successful asset manager in terms of fund flows, but this year is second worst. The company’s oscillation between multibillion inflows and multibillion outflows has continued for several years now, and is driven by just one thing: European investors falling in and out of love with Richard Woolnough’s Optimal Income offering.
Others to have suffered from a swift reversal in sentiment include Woodford Investment Management and Aviva’s multi-asset absolute return funds. Invesco, on the other hand, has had to deal with a longer-running problem in the form of a continual dripping away of assets from its own UK equity income products. Much of this money is “legacy” in nature, meaning there is a natural attrition rate associated with holders of yesteryear closing their accounts or even passing away.
That said, legacy money is typically fairly difficult to shift, as Table 4 hints. In a year of volatility, of increased pressure on fees, and an ongoing shift away from multi-manager portfolios, traditional fund of funds products may have been expected to struggle. But while six of the 10 names in the table are the same as last year, net outflows in all but one case are lower than they were in 2017. It may be that there simply isn’t much “active” money left to come out of these products.
Table 4: Bottom 10 fund groups by 2018 FoF flows
Name | Estimated net flow, year to date (£m) | 2017 netflow (£m) | Total relevant assets (£bn) |
Jupiter | -680 | -1,100 | 8 |
Schroders | -260 | -500 | 3 |
Barclays | -170 | -260 | 2 |
Scottish Widows | -150 | -240 | 6 |
Janus Henderson | -120 | -220 | 1.5 |
Invesco | -110 | 0 | 0.9 |
7IM | -80 | -120 | 1.7 |
Man GLG | -70 | -80 | 1 |
BNY Mellon | -45 | -170 | 0.6 |
Sarasin | -20 | -20 | 0.1 |
Notes: UK-domiciled funds only. 2018 data to October 31. Source: Morningstar. Copyright: Money Management
The leaders at the top of Table 3, meanwhile, also have a familiar look to them. Vanguard, Quilter (previously Old Mutual) and Standard Life have again seen considerable amounts flow into their LifeStrategy, Cirilium and MyFolio ranges, respectively. Investors might have fallen out of love with older multi-manager products, but their interest in more competitively priced, risk-rated solutions continues unabated.
Also of note here is the emergence of discretionary wealth managers Heartwood and Close Brothers. Their inflow figures may be relatively meagre, but the statistics only account for unitised offerings rather than model portfolios, and suggest the desire to outsource – one way or another – remains strong.
An eye on the future
Looking ahead, the new year is once more presenting uncertainties for asset allocators. They will again ponder whether certain asset class valuations are still too high for comfort, but 2019 brings an added complication.
