“Some people might say the problem was that they stuck with some fund managers for too long, but it should also be said that those managers had in some cases delivered more than 10 years of outperformance, and it was reasonable for the company not to wish to dismiss managers for a couple of years of underperformance.
The positive sentiment of Yearsley and McDermott towards M&G’s fund range may also be reflected in the fact that the latest accounts show the company’s products received net inflows from financial advisers and wealth managers of around £10mn a week in 2022.
Numbers crunched
In profit and loss terms, M&G’s story is not dissimilar to that of rival company Abrdn, with an operating profit of £529mn for the whole business wiped out by exceptional items and turned into an accounting loss of £1.6bn.
Those losses are as a result of having to revalue certain parts of the annuity book, where prices fell as a result of higher interest rates, and similar falls in the value of derivatives used to hedge currency risk. As these assets do not need to be sold, they are just paper losses.
Both M&G’s operating profit number and the accounting profit figure are lower for 2022 than in 2021, with the drop in total assets under management of £28bn, to £342bn, contributing to a drop in fee income received.
M&G is divided into three business units: Heritage, which is the legacy individual and corporate pensions, annuities, life, and savings business; the wealth business, which incorporates the Ascentric platform and Prufund; and the asset management business.
In the company’s annual accounts, credit was also given to Prufund for the net inflow of £200mn into the wealth business in 2022. It is also at the centre of one of the growth initiatives the company is targeting, with versions of these portfolios being launched in Italy and Ireland. Prufund is now £58bn in size, the entire asset management unit is further £150bn.
That £200mn of net inflows for Prufund compares with a £1.4bn net outflow from the division in 2021.
The broader target for the business is for wealth and asset management to contribute more than half of the total company profit by 2025.
The asset management business will shortly have a new chief executive, with Joseph Pinto, formerly of Natixis Asset Management, replacing Jonathan Daniels in the role.
