Slide in shares of asset managers sparks job fears
Fears are growing over redundancies across the asset management industry as shares of some of the world’s largest listed investment groups tumbled in the wake of Britain’s vote to leave the EU.
Henderson and Jupiter, the UK-listed fund companies, have been among the hardest hit as their shares have dropped 21 per cent and 18 per cent respectively since the referendum on Britain’s EU membership on June 23.
Daniel Garrod, an analyst with Barclays, said UK fund managers faced a “triple whammy” from reduced investor inflows, cuts in performance fees and reductions in their assets under management.
Several US-listed asset managers have also been affected, including Invesco and Legg Mason, which have seen their share prices fall 13.7 per cent and 9.5 per cent respectively.
“Overall it’s a tough time for asset managers — there will be lay-offs across the industry. You will see it more in listed [companies] as their profits are much more visible,” said Charles Heenan, investment director at Kennox Asset Management, a boutique fund house in Edinburgh.
A partner at a large non-listed asset manager added: “We are not immune to outflows, but [this won’t] have a direct impact on our workforce. A private company doesn’t have to explain to anybody why profits are up or down. [For] listed groups, history suggests it will be different for them.”
Amundi, Europe’s largest listed fund company, and Schroders, the second largest, have also suffered significant share price falls of 12.5 per cent and 13 per cent respectively.
US-listed groups T Rowe Price and Franklin Templeton and UK-listed Ashmore and Aberdeen have coped better.
A senior executive at a large US-listed asset manager said: “The relative share price fall has depended on each company’s exposure to the EU or the UK. Those with large European businesses, or which are very UK-dependent, have been hit more.”
The executive added: “If your business was a bit narrow and you’ve had challenging flows because of [the rise of] passive investments, and you are primarily a UK-focused business, that’s a worry. If Brexit tips the world into a global recession, that will [be a worry] for everybody.”
Justin Bates, an analyst at Liberum, the brokerage, said the companies that faced the biggest problems were Jupiter, Henderson and Schroders.
“All three of them have taken a beating, but particularly Henderson and Jupiter,” he said.
Five banks, including JPMorgan and Goldman Sachs, cut their share price targets for Schroders last week. Jupiter was downgraded by both Barclays and Exane BNP Paribas, while Henderson was downgraded by five banks.
Mr Bates said Jupiter was particularly vulnerable because most of the money it drew from investors last year came from continental European clients, although the company does not have a large physical presence in Europe.