M&G shares jump as client capital returns with £1.2bn of inflows

M&G shares jump as client capital returns with £1.2bn of inflows but investment manager’s profits almost halve on volatility

  • Net inflows return after £2bn of net outflows in the same period last year 
  • AuMA fell from £370bn to £348.9bn and profits fell 44%
  • The firm is investing in its wealth arm to become a key UK market player  

M&G has cheered a bounceback in investor flows, with clients depositing £1.2billion with the investment manager in the first six months of 2022.

The volume of inflows represents a turnaround from withdrawals of £2billion 12 months before, but total assets under management and administration fell during the period to £348.9billion, from £370billion at the end of 2021, as investment losses dwarfed new client capital.

The loss of fee revenue on these assets saw the London-listed group’s adjusted operating profit before tax fall 44 per cent annually to £182million, though this beat analyst expectations of £144million.

M&G shares rose 1.8 per cent in morning trading on Thursday to 221.5p as the firm’s net inflows impressed versus a trend of net outflows impacting peers in the asset management sector.

Asset managers like M&G have been struggling with net outflows as volatile markets and high inflation see investors pull their money out of funds

Investors will hope that the group, which separated from Prudential in 2019, has begun to overcome continued net outflows and a flailing share price since it listed.

Chief executive John Foley said: ‘This is an encouraging set of results and provides evidence that M&G is continuing to build momentum. 

‘Improved client flows underpinned a resilient operational and financial performance despite a period of volatility when many investors reduced their exposure to markets.

‘The turnaround in flows builds on the progress we made in 2021.’

M&G’s interim results also highlighted ‘improved performance’ within its wholesale funds business, with 62 per cent of its funds in the top half of market performers versus 45 per cent in the previous six month period.

The firm told investors it was ‘cautiously optimistic about the turnaround’ in the wholesale business, but it remains ‘mindful of the challenging external environment’.

It also said it believes its wealth management business, M&G Wealth, ‘now has all the building blocks required to progress on its journey to become a major player in the UK wealth market’.

Foley added: ‘Our continued investment in M&G Wealth positions it to become a major player in the UK wealth market.

‘In addition to recently announcing an agreement to acquire Continuum Financial Services, M&G Wealth has also launched PruFund Planet on its digital platform, the first time that PruFund has been offered as a choice on any investment platform in the UK.

‘The current macro-economic environment is creating uncertainty in the markets in which we operate. 

‘However, our diversified sources of earnings and strong shareholder Solvency II coverage ratio protects our ability to invest in the business and, as today’s interim dividend of 6.2p per share shows, deliver attractive shareholder returns.’