UK asset managers warn of tough times as investors pull or divert cash

theguardian.com:

Asset managers have said they are navigating tough investment conditions in the UK, as economic turmoil reduced the value of their portfolios and persuaded customers to pull and divert their cash.

London-based firms including Jupiter, Schroders, and St James’s Place issued trading updates on Thursday, which laid bare the challenges facing fund managers amid soaring inflation and global uncertainty, including the effects of the war in Ukraine.

“A worsening macroencomic backdrop, continued geopolitical challenges and inflationary concerns, particularly in the UK, again weighed upon investor sentiment in the third quarter,” Jupiter Fund Management said.

Jupiter suffered net outflows – the balance between the funds invested v money pulled by clients – worth £600m over the three months to the end of September.

That was despite investors placing £3.8bn-worth of new cash with the firm over the quarter, including £500m from an unnamed sovereign wealth client that was pumping fresh cash into UK investments.

Overall, the value of assets managed by Jupiter fell by 2.9% over the last quarter to £47.4bn.

Assets under management also fell at Schroders, dropping 2.7% to £752bn in the quarter. That included a £20bn decline in its “solutions” division, which covers funds focused on liability driven investing, or LDI.

LDI funds were blamed formagnifying the recent market turmoil, which was triggered by fears over the government’s mini-budget and resulted in a severe drop in UK bond prices. The fall triggered collateral calls on pension funds’ hedging contracts, forcing them to sell assets at speed to raise cash, but resulting in a further drop in prices.

The Bank of England stepped in with an emergency two-week, £65bn bond-buying programme to