M&G had a tough first half to the year

M&G, the asset management arm of insurer Prudential, suffered outflows of nearly £7 billion in the first half of 2016, and the firm warns there will be further pressure on revenues for the remainder of the year.

Assets under management fell from £256.5 billion to £255.4 billion. 

The majority of outflows stemmed from the group's retail business, which lost £6.1 billion, with the remainder flying out of institutional funds. The business also reported a 10% year-on-year drop in operating profit, from £251 million to £225 million. Gross redemptions hit £16.7 billion, with outflows partly offset by inflows of £9.7 billion.

M&G has suffered five consecutive quarters of outflows. In March, the firm reported retail net outflows of almost £11 billion, but net inflows in its institutional arm meant profits were broadly in line with the previous year.

The firm has sought to calm investors, stating its downward slide will likely be short-term, and that its team retains the capabilities that saw its assets under management double between 2008 and 2015.

Results for the wider Prudential group were more positive due to the performance of its Asia business. The division’s operating profits rose 15% to £743 million, and the group’s overall operating profit was up 6% to £2.1 billion.

The results highlight the uphill struggle new chief executive Anne Richards faces. Richards joined the firm from Aberdeen in June, replacing the retired Michael McLintock. M&G was one of several firms that suspended its property funds in the wake of Brexit, and a recent report indicated M&G holds £11.9 billion in serially underperforming funds, the most of any UK asset manager.

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