Companies and economies around the world continued to feel the effects of the coronavirus-enforced lockdowns during the second half of 2020. Investment Week reports on how they have done since then.
Quilter Investors
Quilter Investors' assets under management (AUM) declined by 4% in the six months to 30 June 2020, with net inflows down 25% and an expectation the businesses' margins will further erode in H2.
Higher outflows from the firm's Cirilium Active range of funds were offset by inflows into its Cirilium Blend and Cirilium Passive products, leading to net inflows of £300m, down from £400m in H1 2019. This, alongside volatile markets during the Covid-19 pandemic, let AUM down to £20.8bn, from £21.6bn in the same period last year.
AUM for the Cirilium funds range fell by a smaller 1%, to £11bn, with the firm saying Covid had accelerated a trend started in 2019 of investors favouring its Blend and Passive ranges over its Active offerings.
This switch would likely mean "further erosion of Quilter Investors' margin in the second half as we grow assets in our newer lower margin products", the firm said.
Meanwhile, Quilter Investors' WealthSelect fund range saw AUM increase by 1% to £6.8bn, with Quilter Cheviot's figure falling by 4% to £23.3bn due largely to negative market movements.
Profit in the period for Quilter as a whole slipped to £71m, from £89m in H1 2019, a figure with which the firm said it was "satisfied". The decline in revenue margins saw total net fee revenue fall, too, to £335m.
The number of investors on Quilter's share register was slashed almost in half, as a large number of smaller, retail shareholders chose to take its ‘Odd-lot Offer', which allowed them to redeem their shares at around 120p per share. Over 200,000 shareholders participated, wiping out 45% of its base and costing it £21m.
CEO Paul Feeney characterised the period as "a uniquely challenging environment which has forced us all to reconsider the way we socially interact and undertake business activities".
"In response to revenue challenges in the first half of 2020, we pulled hard on the cost lever, both through structural cost reduction via our Optimisation programme and tactically with a planned reduction in discretionary expenditure of around £30 million this year," Feeney added.
"Our cautious outlook with broadly stable market conditions for the remainder of the year means we continue to expect revenue headwinds. As a consequence, we will maintain a firm handle on expenses with a modestly lower second half out-turn for costs anticipated to offset the expected impact from revenue headwinds.
"We are pleased to see the significant pick-up in net flows across the business in the first half, with gross flows remaining resilient despite the market turmoil and retention rates improving. This gives us confidence that we can deliver improving flows as the Platform migration project completes.
"Notwithstanding short-term uncertainties, Quilter remains well positioned in an industry with secular long-term growth prospects. The business is in good shape and we look forward to the future with confidence."
Royal London Asset Management
Royal London Asset Management has seen its assets under management (AUM) stagnate, as its interim results reveal that figure remained unchanged at £139bn, as of 30 June.
Net internal inflows were at a similar level to the same point last year, with £1.5bn recorded, while net external flows were negative, losing £534m over the period, largely driven by institutional outflows of £1.9bn, which group chief executive Barry O'Dwyer described as corporates and charities "dipping into rainy day funds".
The outflows were partially mitigated by the firm's sustainable fund range performing well in the wholesale sector, which generated £1.3bn of net inflows and contributed to the firm topping the rankings of the Pridham Report.
Overall net flows were positive, with inflows recorded of £997m, although "adverse" market movements of £492m resulted in an identical AUM to 30 December 2019.
Gross flows were up 14% for the firm, growing from £12.6bn to £14.4bn as the external flows' growth of 24% negated the slight reduction of 3% in internal flows.
Active funds continued to outperform their benchmarks, with 60% doing so over three years, although this is markedly down on H1 2019's figure of 97%.
Multi-asset funds particularly struggled as they "were not positioned for the sharp correction in equity markets", according to the firm, which has "impacted performance in terms of adverse asset allocation".
Investment performance in actively managed OEICS was akin to the previous year, with 82% performing above their respective medians over a three-year period, on a money-weighted basis.
As a group, Royal London recorded a loss before tax of £181m, down on H1 2020's profit of £397m.
O'Dwyer said: "When markets fall, we make a loss and when markets grow, we make a profit.
"Despite market volatility and economic uncertainty assets under management were stable at £139bn. Our capital position remains strong.
"Covid-19 will inevitably continue to have an impact on new business prospects. Looking further ahead, our strong capital position and unrivalled reputation with advisers and customers will stand us in good stead as we continue to help customers meet their protection, investment and long-term savings needs."
