British active fund investors face a bloodbath in 2019

... Credit :
...
Shadrach   in Business & Office

Last updated: 26 January 2020, 04:28 GMT

In 2019, Invesco, Standard Life Aberdeen, M&G and Schroders achieved a list of Europe's worst-selling investment houses as high-profile controversies in the industry intensifying market aversion to conventional stockpickers.

According to estimates from Morningstar, the data provider, the active fund investors with large British arms ruled the chart, taking up nine of the top 10 slots.

The active investment industry, where fund managers pick stocks instead of following an index, was under severe pressure due to disappointing performance, high fees and passive fund popularity.

The strong redemptions from many of London's most well-known active managers follow the collapse of Neil Woodford's investment company, the financial regulator's levying of large fines, and the closure of a prominent property fund.

Promoted Recommendations

Negative advertising, like that generated by the Woodford affair, has hit the active industry at a very bad time, and further discouraged buyers. 

said Calastone fund transaction network Edward Glyn.

This was a terrible year for active managers

said Ali Masarwah of Morningstar

Investors withdrew € 15.8 billion from Standard Life Aberdeen, the UK's biggest asset-measured investment company, while Schroders, the country's largest market-value house, bled € 6.3 billion, its worst outflows from its European-based mutual funds in over a decade. 

Other groups hit by fleeing investors included Invesco, whose operations in Henley propelled Mr Woodford to fame, M&G, recently listed on the London Stock Exchange, BNY Mellon, and Franklin Templeton, US managers with significant operations in London.

Promoted Recommendations

With Merian, the £ 22bn boss co-foundedby City banker Richard Buxton, and £ 28bn house Artemis struck by major redemptions, luxury houses have not spared the suffering.

The active exodus is yet another burden for British fund managers, who are already struggling with lower profit margins and relentless pressure on fees while preparing for the UK's EU exit.Mr Masarwah said the situation would have been much worse for active managers across the UK and Europe had it not been for last year's stock market boom, which helped drive success through their portfolios. 

"The markets rescued them," he announced. "It's pretty ugly for active managers."

According to Morningstar, UK-based index trackers received £ 19bn of net inflows last year while active funds saw outflows of £ 32bn, their highest recorded amount.

Promoted Recommendations

Passive funds made up eight out of the 10 biggest funds in the UK at the end of 2019, compared to only three a year earlier. Funds administered by BlackRock and Vanguard monitoring recent mega active funds such as SLA's Gars, M&G Optimal Income, BNY Mellon Real Return and Invesco High Income, operated by beleaguered founder Mark Barnett, FTSE UK Total Class.

SLA said that the rise of passive has affected the active managers, but added:

With stocks expected to become more competitive over the next few years, active managers have the opportunity to prove their worth.

Schroders, M&G and Janus Henderson refused to comment on this. Invesco said customers had reacted to market news during the third quarter, such as the prolonged negotiations over Brexit and the US-China trade war, leading to outflows in its UK retail business. 

{networkAds4}

Artemis said the outflows have been linked to weaker performance across a number of its funds and due to Brexit concerns. Merian and BNY Mellon attributed their redemptions in 2019 to the difficult conditions for absolute return funds.

Franklin Templeton, who has endured years of redemptions from creditors, said that its sales numbers are rising internationally for a number of areas. 

Major US players dominated the best-selling list in Europe. BlackRock weighed in at € 64 billion, followed by Pimco (€ 44.5 billion) and Vanguard (€ 22.5 billion). The statistics cover open-ended shares, and European-based exchange-traded funds.

 




Want more opportunities?

Join 2715 newsletter subscribers

 Your data is safe & protected.