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Ill wind buffets sales of industry flagships

One of the clearest indicators of how the UK&#39s fund management companies are faring – PBI Newmedia&#39s six-monthly UK fund sales and marketing report – was published last week. Along with PBI&#39s annual fund industry review, this is still the only publicly available breakdown of industry sales figures.

Before reading too much into the report, it should be said that these figures cannot be taken as representing the whole story. The figures are reported to PBI by the companies themselves and do not necessarily adhere to the same guidelines.

Nevertheless, the latest report, which covers the first six months of 2001, still provides the best evidence of how investment houses survived last winter&#39s chill and how they are poised going forward.

Predictably, Fidelity is still the leader in both the direct and IFA retail markets, with gross intermediary sales totalling £769m across its unit trust and Oeic range in the first half of the year.

But competition in the IFA market is tight. Threadneedle boasts IFA sales of £1.06bn for the period, which theoretically puts it at the top of the IFA tables. However, it confesses that around half these sales came from Germany, where it markets its UK-based Oeics rather than Sicavs or Ucits. With this taken into account, Threadneedle ranks third in the UK IFA market, behind second placed Newton.

Newton has had a tempestuous year internally, with several fund managers and directors leaving the group. However, much of this activity came at the end of the second quarter and appears to have had little effect on the group&#39s first-half figures.

Most of its big name funds, including its £585m higher-income fund, have seen changes in manager over the past six months and it will be interesting to see how it fares over the last two quarters of 2001.

Hargreaves Lansdown head of research Mark Dampier believes Newton will survive its raft of departures and that IFAs&#39 opinions of the group have not been too badly damaged. “The thing about Newton is that it sells around 35 per cent of its business through third parties, such as Skandia and Friends Provident, so it is a pretty strong business. I do not think it has been hit too badly by the changes,” he says.

ABN Amro, which has topped recent opinion polls as IFAs&#39 favourite investment house, comes in a respectable fourth in the IFA sales chart, despite being only the 52nd biggest manager in terms of funds under management. Of the £497m which it took in IFA sales over the first half of the year, more than 50 per cent went into its UK growth fund, with most of the rest split between its new UK select opportunities and equity income funds.

Credit Suisse Asset Management is another smaller firm which sold well across the IFA community. Its popular transatlantic and income funds drove it to its best ever month of sales in April and lifted it to 11th in the IFA sales chart for the half year, despite it being only the 41st biggest UK investment house.

The smaller operations have eaten heavily into the sales of the bigger players this year. Invesco Perpetual, the UK&#39s second-biggest Oeic and unit trust provider, took gross sales of just £770m in the first two quarters. Its £1.5bn Euro-pean growth fund, which was last year&#39s best seller, still managed to sell almost £150m despite lagging performance. But worries over the effects of the merger were clearly visible in the overall sales figures.

Another big player which continues to punch well below its weight in the retail market is Gartmore. Its IFA sales of £241m for the half were almost entirely accounted for by Roger Guy&#39s European selected opportunities fund.

Plan Invest joint managing director Michael Owen says: “It has got a great name and, going back 10 years, it was one of the best fund managers around. But at the moment it is an underachiever. It has had a lot of corporate instability over the past few years and this year it lost UK manager Tim Gregory, which has really only left Roger Guy as the kingpin.”

Schroders is another investment house that has lagged in the IFA sales tables, ranked 13th, despite being the third biggest provider in terms of funds under management.

The PBI figures remind fund managers that IFAs have got long memories. While big houses such as Fidelity and Threadneedle are still taking strong sales, many other giants have lost out to the smaller and more energetic players. Owen says he often finds it difficult to get access to fund managers in the bigger houses and feels there is an air of complacency.

The rise of the small and medium-sized players looks set to increase, with operations such as New Star having moved into the picture during the last half of 2001. In a market where there are dwindling sales volumes and mostly negative returns, IFAs are inc-reasingly looking away from the big brands. For some investment houses, it may be another long, cold winter.


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