Fund manager GQG is the latest investment firm to be hit by the UK pension fund cash scramble as clients liquidated $US1.5 billion to meet margin calls.
The Fort Lauderdale-headquartered global equities manager reported net inflows of $US800 million for the September quarter. GQG’s assets stand at $US79.2 billion, down from $US87.4 billion as global stocks sold off in a horror month for market.
But the fund manager said it continued to “see equity de-risking among institutional clients and tax loss harvesting among retail clients, which have driven higher outflows during the quarter. In particular, the recent extreme volatility in gilts and currencies contributed to gross outflows of roughly $US1.5 billion from our UK-domiciled clients.”
The release follows Magellan’s funds under management in which it reported $3.2 billion of outflows from institutional investors – of which about half related “to the liquidity requirements of client impacted by the global volatility in late September”.
The ASX-listed fund manager revealed on Thursday that its assets had slipped by 11.6 per cent to $50.9 billion, well below levels anticipated by analysts.
The sudden surge in long-term UK bond yields in response to chancellor Kwasi Kwarteng’s mini-budget prompted UK pension funds to urgently raise cash as hedges put in place to protect them from falling interest rates were margin called. That prompted the Bank of England to intervene in the bond market.
Among the assets liquidated were UK government bonds but also global equities holdings and Australian mortgage-backed securities.
GQG is among the better-performing global equities managers. But it recently warned that institutions were de-risking, switching out of equities into safer assets. All eyes will be on other Australian listed managers, which may have also experienced large and sudden redemptions from UK clients.
