UK active fund managers suffer bruising 2019
UK-domiciled investment funds suffered £17bn net outflows in 2019, with active managers enduring a particularly punishing year amid a series of industry scandals and stiff competition from passive tracker funds.
Invesco, Aberdeen Asset Management and M&G topped a ranking of Britain’s worst selling fund houses for the year, according to figures from financial data provider Morningstar.
The active investment industry, where fund managers select stocks rather than tracking an index, has come under pressure following disappointing performances from many managers and the increasing popularity of cheaper passive funds.
A series of high-profile fund suspensions added to fund managers’ woes in 2019, including the collapse of former star stockpicker Neil Woodford’s investment empire after his flagship fund was frozen and the suspension of M&G’s £2.5bn property fund in December.
Morningstar analyst Bhavik Parekh said these scandals had left a series of “black marks” on the active fund management industry.
“Events such as these haven’t done anything to stem the flow of assets from active to passive vehicles,” he said.
Invesco suffered the worst net outflows of any UK fund house, totalling £9.3bn in 2019, with two of its funds also listed in the top five individual vehicles with the largest outflows.
Parekh said Invesco had a “year to forget”, with assets under management dropping globally as well as in the UK.
The fund house’s performance in the UK has been hurt by growing concerns over the performance of three funds managed Mark Barnett, a former protege of Woodford.
Investors pulled at least £1bn from the three in the final quarter of 2019, and Barnett has moved to reassure investors the funds will not fall victim to the liquidity problems that helped bring down Woodford.
Passive funds enjoyed net inflows of £19bn in 2019, while their active counterparts shed £32bn — although some of those losses were due to assets being relocated to Luxembourg.
The year’s best-performing fund was the Vanguard FTSE UK All Share Index Unit Trust, which enjoyed inflows of £1.82bn, propelling it to become the third largest open-ended UK-based fund, up from eighth in 2018.
The two next best-performing were Aberdeen Standard’s Global Corporate Bond Tracker and Blackrock’s Blackrock ACS World ex UK Equity Tracker, which both saw net inflows of £1.6bn.
Blackrock, the world’s largest asset manager, attracted the most assets on an absolute basis in 2019, gaining £6.9bn, while indexing giant Vanguard has the highest growth in assets from flows at £4.7bn.