Perpetual CEO admits struggle to retain client assets

Greater than expected outflows and challenging flow patterns at J O Hambro Capital Management (JOHCM) have led to outflows of $16.2 billion for Perpetual in FY25. 

The asset manager saw total net outflows of $16.2 billion during the year, with $7.7 billion of this occurring at J O Hambro, particularly from its International Select and Global Select funds which have experienced underperformance.

While this is an improvement on FY24 which saw $18.4 billion in net outflows, including $8 billion from J O Hambro, the firm acknowledged the UK affiliate is experiencing “challenging flow patterns”. 

This was the greatest outflow of its six affiliates, followed by US equity manager Barrow Hanley which lost $4.6 billion due to its structural exposure to pension funds.

J O Hambro is a UK fund manager set up in 1993 as an active global equity manager and was acquired by Perpetual as part of the Pendal acquisition in 2023. Later that year, it was announced regional leadership would be subsumed into a larger global division with a global head of investment strategy.

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As a result, chief executive Bernard Reilly described how Perpetual is taking active steps to improve its presence with a new leadership team and a range of investment capabilities. 

It would like to see JOHCM possess a strong brand with global reach, new capabilities, a range of product structures that can be expanded across Europe, UK, Africa and the US, and a range of seeded investment capabilities that can grow over time. 

During the last financial year, it already reset the distribution approach with a move from regional to international leadership, closed three investment strategies, and launched a targeted campaign for certain funds. 

It stated: “We have accelerated our plans to revitalise J O Hambro as part of our new asset management strategy which includes product rationalisation and reinvesting funds in the business to support longer term growth. Importantly, the business remains a highly regarded investment firm in Europe and the UK with high-quality investment talent, and we are focused on returning the boutique to growth over time.”

Expanding on a shareholder webinar, Reilly said: “We don’t have a problem attracting new client money with over $50 billion of gross inflows for the year. We need to do a better job at retaining client money and, in some pockets, delivering better investment performance.

“In J O Hambro, we have a strong and well-regarded brand with a global footprint and specialist capabilities that we can add to. While we have a strong platform to add capabilities, we believe the platform has been built for scale and is currently underleveraged. It has been impacted by broader market sentiment with many active UK managers facing headwinds in the market. 

“Our observation is the boutique has underinvested in new capabilities for a number of years and we will look to restore this, seeding new capabilities that can grow over time.

“We have more work to do to restore JO Hambro to its heritage strength but we believe we have the right plan to do so.”