M&G deflected another year of outflows and delivered adjusted profits above analysts’ expectations as the UK fund manager tries to reverse its underperformance two years after a spinoff from insurer Prudential.
The savings and investment group, which has had a tough few years characterized by investors pulling in funds and a falling share price, reported net inflows of £2bn for 2021, against outflows net of £6.8bn a year earlier.
Assets under management rose 0.8% to £370bn, beating consensus expectations.
“We told the market that we would take drugs in relation to our asset management business, and we took it, and what that brought was a turnaround in flows,” the chief executive said. John Foley at the Financial Times.
The measures included cutting fees and changing the way fund managers operate in its retail business, where outflows had been the largest in previous years. “We’re more competitive now,” Foley added.
The company has announced a £500m share buyback program, having achieved several spin-off targets – including a two-year capital generation of £2.8bn and £145m of cost savings – sooner than expected. It also announced a second interim dividend of 12.2p per share.
Shares rose 11.4% by mid-morning to £1.98, paring declines over the past 12 months to 3.4%.
M&G has a small exposure to Russian and Ukrainian assets, which amounted to 0.1% of its total portfolio as of February 25. However, following Russia’s invasion and Western actions to cut the country off from the global financial system, M&G has marked them down.
“There is no market, so Russia is not investable – it is in many ways,” Foley said. “Anyone who has these types of assets will hold them for a while.”
“We believe that the actions of the Russian regime in Ukraine are abhorrent,” he added.
Adjusted operating profit fell to £721m last year from £788m in 2020, but that was still ahead of expectations.
However, overall after-tax profits fell sharply to £92m from £1.14bn in 2020, which Foley partially attributed to exchange rate fluctuations.