Investors pulled a hefty £7.5bn from M&G’s asset management arm throughout 2019 while money piled into the firm’s savings arm.
In its yearly results, published today (March 10), M&G reported overall net outflows of £1.3bn as the £7.5bn withdrawn from its funds business was countered by inflows of £6.2bn into its retail savings service.
Despite net outflows, the fund house’s assets under management rose slightly from £321bn at the end of 2018 to £352bn on December 31, 2019.
The firm’s operating profit before tax slipped from £1.6bn to £1.1bn year-on-year while its profit after tax jumped from £811m to £1bn over the same period.
This is the company’s first yearly results since it demerged its UK and European business from M&G Prudential.
Chief executive John Foley said: “We have achieved much in 2019. As well as executing a successful demerger, we have maintained a clear focus on the day-to-day management of our business as indicated by a positive set of financial results in a challenging market.
“We have made a good start to life as an independent business and we are strongly positioned for growth.”
Mr Foley said M&G’s diversified investment capabilities, coupled with its client relationships in 28 markets, meant it was well-positioned to meet the growing global demand for savings and investment solutions.
M&G faced a number of challenges last year.
At the end of 2019 the firm suspended dealing in its property portfolio following a period of sustained redemptions and the fund remains suspended as of today.
The firm also paid a fine of £24m to the Financial Conduct Authority for historic failings in its non-advised annuities business.
Looking forward, M&G is embarking on a five-year transformation programme. As part of this, it aims to trim its staff costs by 10 per cent in 2020 and has launched a voluntary redundancy scheme to shed staff.
Mr Foley added: “Global markets continue to be unnerved by a series of factors, including most recently the spread of the coronavirus and the potential economic impacts of it.
“Across the asset management industry, active managers continue to face pressure on profitability because of the popularity of passives and changes in the distribution landscape.
“At M&G, we are rising to this challenge by reducing costs through restructuring and concentrating our resources on areas where client demand is rising and profit margins are resilient.”
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