Brooks Macdonald saw more than £500m of net outflows in the second half of 2019 as it lost a £244m investment deal and investors fled its discretionary service.
In a trading update, published today (January 16), the asset manager reported net outflows of £506m.
The fund house lost an investment management agreement with Grosvenor Consultancy in the last quarter of 2019, accounting for £244m of the outflows.
According to the update the contract was terminated because the two companies could not come to an agreement for Brooks Macdonald to buy Grosvenor Consultancy.
The results also showed investors pulled £235m from the company's discretionary fund management service.
Despite strong outflows, the fund house made most of the funds back in performance, increasing its funds under management by £448m over the six months to December.
Overall the company's funds under management fell by £58m to £13bn over last six months of 2019.
Caroline Connellan, chief executive of Brooks Macdonald, said: "It has been a positive six months for Brooks Macdonald.
“Over the first half of our financial year we maintained [funds under management] levels, delivered strong investment performance, and made good progress in our international business.
“We continue to deliver on our commitment to improve profit margins over the medium term, and the recently announced acquisition of Cornelian represents a significant step forward in our strategy of delivering sustainable value-enhancing growth.”
Ms Connellan added that although the recent UK election had removed some uncertainty, the broader macroeconomic and political backdrop made it “prudent to remain somewhat cautious” about the short-term outlook for flows.
She said: “We remain optimistic about the opportunities for Brooks Macdonald and, given our continued investment in talent, focus on delivering for clients and advisers, and ongoing cost discipline, our expectations for full year profit remain unchanged.”
Stock broker Peel Hunt retained its ‘buy’ rating on Brooks despite the outflows, saying “increasing confidence” and “improving sentiment” should provide a more positive backdrop looking forward.
The broker said: “We continue to believe that Brooks is well placed to deliver strong earnings growth due to good cost control and the recent acquisition.
“The new management team has successfully dealt with the legacy issues in the business, delivered cost savings from the existing business that underpin the operational leverage that should be delivered, and is now moving onto the front foot in terms of acquiring complementary businesses at a time when investor sentiment is recovering.”
imogen.tew@ft.com
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