F&C suffers €16bn outflows as some of assets move to fiduciary mandates
EUROPE - The Dutch trend towards fiduciary management accounts for much of the £11bn (€16.6bn) outflow in institutional assets F&C Asset Management suffered in 2006.
In a statement on assets under management, F&C noted that withdrawals of institutional assets since the third quarter of 2006 were "primarily Dutch institutional balanced assets".
It added that further Dutch institutional outflow was likely owing to the ongoing trend away from balanced to fiduciary mandates. For 2007, F&C has already been notified about a further outflow of £5.16bn from Dutch institutions.
Currently it is still managing £7.5bn in institutional assets on behalf of Dutch clients and it hopes to acquire more specialist mandates. To achieve this, the company's board, with shareholder support has recently adopted a three-year plan which will see a move towards more specialist products.
"The new specialist product range will include alternative investments and tactical asset allocation," according to an F&C spokesman. "This move will require some additional investment in 2007 in the form of both investment and people and in the form of developing some infrastructure to support the delivery of those products."
F&C will self-fund this initiative, which will lead to a lower dividend for 2007 and a possible reduction of this year's operating margin from around 40% to 30%.
In October last year the Dutch industry-wide transport fund Pensioenfonds Vervoer completed the withdrawal of £3.7bn in assets from F&C following the appointment of Goldman Sachs as fiduciary manager.
Institutional inflows for F&C in 2006 amounted to almost £3bn bringing assets under management at year-end 2006 to £104.1bn, down from £131bn in 2005.
According to Bloomberg, F&C's shares fell 24% following the announcement.