Fidelity International has seen investment flows from both the retail and institutional arena turn positive in recent months, hinting that parts of the asset management industry may be stabilising after a terrible 18 months.
Stripping out low-margin money market funds, investors withdrew a net €266.3bn (£247bn, $371bn) from the European fund industry in the first nine months of 2008, according to data from Lipper FMI, by far the worst year on record. Net flows have been negative for each of the five quarters since June 2007.
However, Michael Gordon, global head of institutional investment at London-based Fidelity International, claimed it was seeing light at the end of the tunnel.
“Our [institutional] business is well ahead in terms of flows as we come to the end of the year. Our entire business is also ahead in the last three months,” said Mr Gordon, who put year-to-date net institutional inflows in the “single figure” billions of pounds range. “We have seen small inflows on the retail side in the last three months. Retail redemption levels have dried up and we have started to see money coming back in.”
Mr Gordon attributed much of the resilience to Asian institutions, such as South Korea’s National Pension Service and Taiwan’s Labor Pension Fund, which have invested fresh money despite suffering unprecedented losses in the past 18 months. “I’m really impressed by our institutional clients on a global basis. There are many new clients in emerging markets, such as sovereign funds, and they are untested [in difficult market conditions]. But these new guys have increased their exposure to markets to take advantage of weakness,” added Mr Gordon.
He claimed Fidelity was now performing better than the wider industry because, unlike many of its peers, it did not get carried away with launching populist thematic funds during the boom years, many of which are seeing sharp redemptions.
“We did not have any hot, sexy funds. We had no commodities for example. We did not get carried away as far as others. People are giving us credit for the fact we stuck to our knitting, stuck to our beliefs.”
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