Henderson assets stable despite Pearl outflows
Assets under management at UK-listed asset manager Henderson Group have remained relatively stable so far this year despite challenging market conditions and the threat of billions of outflows from its biggest client.
For the year up to the end of April, Henderson's assets under management fell from £59.2bn (€74.4bn) to £56.2bn. However, excluding assets belonging to Henderson's biggest client, closed life funds manager Pearl, its assets under management rose from £39.6bn to £39.8bn.
Over the four months Pearl pulled a net £1.1bn of assets from Henderson, leaving £16.4bn with the manager. Pearl gave notice on £8bn of further assets last year, but Henderson continues to look after the assets until Pearl decides to withdraw them from the manager. The Pearl Staff Pension Scheme also withdrew its mandate of £1.8bn in the period. The withdrawal means an annual loss in revenue of about £2m, Henderson said.
Henderson said withdrawals by Pearl will have a minimal effect on Henderson's fee income thanks to an agreement that if fees fall below a certain threshold, Pearl will make good the shortfall until April 2015, according to Henderson.
Apart from the withdrawals by Pearl, net inflows into the firm were broadly flat in the period. US retail investments enjoyed net inflows of £200m, and property investments received net inflows of £500m along with £2bn of commitments that Henderson will invest over the next two years. Net outflows of £600m hit investment trusts, and its European and UK retail investments. Its assets under management in hedge funds, US property, private equity and structured products remained stable over the period at a total £5.5bn.
Negative foreign exchange movements also contributed to a slight fall in assets under management.
Roger Yates, Henderson's chief executive, said in a prepared statement: "Global market conditions in the first four months of the year have been difficult. Retail investor confidence, particularly as a consequence of the credit crunch, is fragile and, as expected, flows into our wholesale funds have been subdued.
"The current outlook for our property and institutional businesses, however, looks promising and we are pursuing a number of initiatives to expand our hedge fund assets over the next 12 to 18 months. In general, 2008 fund raising will be biased towards the second half of the year."
Michael Long and John Holmes, analysts at investment bank Keefe, Bruyette & Woods, published a positive report this morning on the results.
They said: "While today's trading statement was reassuring given the tough conditions at the start of the year, we believe the valuation looks full at 12 times 2009 earnings, compared with Schroders and Aberdeen's 10 times."
This morning Henderson's share price fell from 131.75p to 130.5p, a fall of under 1%.
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