Pendal Group has reported a historic low for performance fees after the worst market returns since the September 2011 quarter caused performance fees to fall by 91 per cent.
In its half-year results for the six months to 31 March 2019, the firm, formerly known as BT Investment Management, said it saw ‘significantly lower performance fees’ during the period, falling from $47.6 million in the same period a year ago to $4.4 million.
This was attributed to volatile global markets, subdued industry flows and uncertainty surrounding Brexit in the UK. Pendal said funds investing in UK, Europe, Japan and Asia ex-Japan had particularly underperformed due to macroeconomic factors.
Pendal chief executive, Emilio Gonzalez, said: “The market returns in the December quarter were the worst on record since the September 2011 quarter, and despite a rebound in market returns in the March quarter, the volatility over the half has led to a significant increase in risk aversion from clients. Any resolution of the US/China trade talks and clarity over Brexit should see investor confidence improve.”
Cash earnings per share were 26 cents, some 27 per cent lower than the same period a year ago, and it declared an interim dividend of 20 cents per share.
Fee revenues were down 18 per cent from $296 million to $243 million while funds under management were down $0.7 billion as a result of outflows from European and Asian equities but were offset by strong inflows into cash and fixed income strategies.
There were net outflows of $1.2 billion from European equities during the period due to slow economic momentum in Europe, which contributed to total net outflows from OEIC funds of $1.7 billion. Meanwhile, fixed income saw inflows of $0.8 billion and cash saw inflows of $0.9 billion.