M&G PLC (LON:MNG), the fund manager recently demerged from Prudential PLC (LON:PRU), said retail investors have continued to desert the business over the last six months.
Net outflows were £4.1bn in the six months to end-June 2020, with retail asset management recording a £7.7bn decline cushioned by £2.8bn of institutional inflows and a net £800mln rise in retail savings through PruFund.
Assets under management fell to £339mln at end June from £352mln at end December 2019, which M&G said was due to the coronavirus-inspired market volatility in March.
Operating profits dropped to £309mln from £714mln, while there is an interim dividend of 6p.
John Foley, chief executive, said M&G is working to improve its retail performance and customer value and the acquisition of Ascentric is designed both to strengthen its UK position and take it into high-value wealth management.
The Ascentric deal completes at the start of September and will bring an IFA digital wrap and wealth management platform, £15.5bn of assets under administration, and relationships with 1,500 advisers representing 90,000 individual customers, he added.
Foley described the first-half as a 'resilient performance in extremely difficult times, with the value of our diversified business mix coming through strongly'.
"Earnings from our Heritage Business have remained steady, our balance sheet is robust and credit quality remains high. Over 98% of the debt securities held by the shareholder annuity portfolio are investment grade and only 15% are BBB,” Foley concluded.
Bumper yield but...
Nicholas Hyett, an equity analyst at Hargreaves Lansdown, said; "Given M&G’s very high yield – consensus has it north of 10% – perhaps the main news today is that the group’s stuck with the dividend."
"That’s been made possible by a three-year capital generation target that remains intact and Solvency ratio that, while falling, remains with the group’s target range."
"However, there are some underlying trends that are not so reassuring, he adds, in particular the asset management business – M&G’s focus going forwards – continues to see outflows, particularly in the more lucrative retail asset management business.
All-in-all M&G is a bit of a ‘wait and see’ story at the moment. But with the dividend now looking set to remain intact this year, investors prepared to back the group are being richly rewarded for their patience.”
Shares rose 2.5% to 178p.
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