M&G Least Popular Fund House of 2016

M&G proved the least popular fund provider of 2016, with UK investors pulling £7.5 billion from their funds, data from Morningstar Direct revealed

Karen Kwok 3 February, 2017 | 3:44PM
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M&G proved the least popular fund provider of 2016, with UK investors pulling £7.5 billion from their funds, data from Morningstar Direct revealed. In fact, M&G has suffered continuous outflows since March 2014, with the exception of just two months.

Looking at the least popular funds of 2016, four of the top 10 funds by outflows are managed by M&G. The M&G Optimal Income fund saw the worst outflows across all sectors, losing £3.1 billion in 2016. Morningstar approached M&G for comment, but the firm declined to comment on flows.

Ashis Dash, associate director of fixed income strategies for Morningstar believes the primary reason for continuous outflows in this fund is due to its underperformance over the last two years, however analysts retain their conviction in this fund.

“The underperformance at the fund has been largely driven by manager Richard Woolnough’s short duration stance, broadly in place since late 2011. While this approach proved beneficial in the taper tantrum of 2013, it has since held back returns in an environment of declining core government bond yields,” said Dash.

“The fund manager Richard Woolnough has consistently applied the fund’s investment process over the years, reflected in the fund’s strong long-term track record.”

Silver Rated M&G Global Dividend and M&G Strategic Corporate Bond were the fifth and seventh least popular funds in 2016, recording £1.2 billion and £904 million outflows respectively. M&G Recovery came eighth on the list with outflows of £901 million.

After M&G, the second least popular fund provider in 2016 was Schroders, which suffered from £3 billion outflows.

Global Outlook Looks Worse for Aberdeen

This week, Aberdeen revealed £10.5 billion of global outflows in the fourth quarter of 2016. The picture is not quite as stark when considering jUK investor activity according to Morningstar Direct, which shows £464 million outflows for the period.

But among UK investors Aberdeen has seen continued outflows since April 2013, with the exception of just one month. In July last year, the month following the Brexit vote, the fund house recorded £441 million outflows, the largest monthly outflow in four years.

Martin Gilbert, chief executive of Aberdeen said: “Investor sentiment had been improving steadily in the early part of the quarter, but stalled following the US presidential election result with investors putting asset allocation decisions on hold. Overall Aberdeen remains in good shape, we have a strong balance sheet, a global client base and wide range of capabilities to meet the needs of investors.”

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
abrdn Emerging Markets Equity I Acc864.94 GBP-0.19Rating
M&G Global Dividend GBP A Acc494.82 GBP0.51Rating
M&G Optimal Income GBP A Acc233.72 GBP-0.26Rating
M&G Recovery GBP A Acc307.43 GBP0.75Rating
M&G Strategic Corporate Bond GBP A Acc126.23 GBP-0.29Rating

About Author

Karen Kwok

Karen Kwok  is a Reporter for Morningstar.co.uk

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