Investors withdrew almost £5bn from Jupiter and Merian in the first quarter of 2020 as the two fund houses announced plans to merge.
In a trading update published to the stock exchange today (April 15), Jupiter reported net outflows of £2.3bn for the three months to March while investors pulled £2.6bn from Merian in the period.
The outflows, alongside about £4bn of negative market movements for both firms, has seen their combined assets under management tumble 22 per cent — from £65bn to £50bn over Q1 2020.
At Jupiter investors primarily fled its fixed income strategy, taking £1bn from the funds, alongside £700m and £600m respectively from its European Growth and Alternatives strategies.
The Global Equity Absolute Return fund was the hardest hit at Merian, with investors pulling a hefty £1.4bn from that fund alone.
Jupiter stated: “So far this year, in common with the asset management industry as a whole, Jupiter has faced challenging market conditions, largely brought about by the global coronavirus pandemic, which has had a significant adverse impact on the economy, global financial markets including asset values and, consequently, on our AUM."
The fund house said it had no current intention to furlough any staff or take advantage of any government schemes during this period. It has also maintained its dividend payment for 2019, paid on April 9.
It added: “In this uncertain environment, the group's commitment to maintaining an appropriate cost base remains as important as ever, and we continue to review and challenge costs within the business, making reductions to costs where we are able to without affecting our ability to deliver the investment returns and high standards of service our clients expect from us.”
Jupiter announced it was to acquire rival fund house Merian Global Investors in February this year for £370m, all via shares in Jupiter.
Merian shareholders will own a combined 17 per cent of the business after the takeover is completed and the five fund managers who were major shareholders in Merian will own about 1 per cent of the combined company.
In today’s update, Jupiter stated the strategic and financial rationale of the acquisition “remains compelling” despite the market volatility experienced by both firms.
It did note, however, the estimated future management fees for the Merian Group has slipped from £140m a year in December 2019 to £98m as at March 31.
This means after previously predicting a future operating margin of between 50 to 60 per cent, Jupiter said today this could be as low as 40 per cent.
The acquisition is expected to be approved at the Jupiter Annual General Meeting on May 21 this year.
imogen.tew@ft.com
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