The City’s asset managers are continuing to battle inflation, weak investor confidence and cost pressures, which are pushing down assets under management.
On 17 January, Liontrust, Rathbones and Brooks Macdonald all issued trading updates for the three months ended 31 December, with all three struggling to hold on to client funds.
Liontrust reported net outflows of £1.7bn for the quarter, with all categories of funds, including the en vogue alternative space, bleeding assets.
Chief executive John Ions cited “ongoing negative sentiment among investors and the current challenges facing active asset managers”.
“These challenges include the fact that active managers have never been confronted by such a competitive environment to attract and retain assets as is the case now, both from within and outside the sector.”
The figures for Liontrust come as the firm continues to grapple with the aftermath of its failed bid last year to take over Swiss rival GAM.
Liontrust tabled a £96m bid for GAM in May, but only 33.5% of GAM shares were tendered in support — falling short of the 66.6% required.
The bid was consistently opposed by activist shareholder group NewGAMe, a consortium of investors controlled by French telecom billionaire Xavier Niel and his company Rock Investment, which went on to take over the asset manager and replace its board.
GAM chief executive Peter Sanderson was replaced by NewGAMe’s preferred choice, Elmar Zumbuehl, who was previously its chief risk officer and has worked at the Swiss asset manager since 2010.
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At Rathbones, total net flows in wealth management, an area many fund houses are looking towards for more sustainable revenues, were flat in the quarter
Rathbones’ trading update comes as it continues to integrate Investec Wealth & Investment UK, which it bought for almost £840m in April last year.
Investec Wealth & Investment saw outflows of £300m in the final quarter of last year and “economic uncertainties are expected to persist in 2024”, according to the trading update.
In September, Rathbones announced chief financial officer Jennifer Mathias would step down from the board at the end of 2023 to take on a new position of group chief of staff to support the Investec Wealth & Investment integration. She was replaced by Iain Hooley, who was previously Investec Wealth & Investment’s UK boss.
Overall net outflows at Brooks Macdonald were £100m “during a challenging period for both the economy and financial markets”.
Brooks Macdonald announced in October that it would cut around 55 roles, adding it expected to make £4m in annual savings from the staff reduction.
Asset managers continue to face significant headwinds, with persistent outflows and declining revenue meaning some are struggling to generate decent levels of profit. UK-listed Jupiter Fund Management warned in a trading update earlier this month that it expects outflows for 2023 to total £2.2bn.
Fund management bosses told Financial News in December that profitability would be a key theme shaping the sector in 2024, with firms needing to balance the need to cut costs while also investing in growth areas like technology and fuel growth.
But there was some positive news in the 17 January trading updates, as resurgent markets towards the back end of 2023 help propel all three managers’ assets upwards. Liontrust ended the year with assets under management of £27.8bn, up 0.6% on the quarter. Brooks Macdonald was up 4.3% to £17.6bn, and Rathbones was up 4.6% to £105.3bn.
To contact the authors of this story with feedback or news, email David Ricketts and Justin Cash
