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Henderson Says Clients Pulled Money in 2011, Outlook Uncertain

Henderson Group Plc, the fund manager that acquired Gartmore Group Ltd., said clients pulled 6.4 billion pounds ($10 billion) of assets last year and warned of an “uncertain” outlook for 2012.

Customers withdrew 10 percent of the fund manager’s assets as equity markets tumbled in the second half on concern that Greece would default on its debt. They continued to take money out after the start of this year, Chief Executive Officer Andrew Formica told reporters on a call today.

“There is an underlying current of general outflows and the outlook doesn’t look that great,” said Keith Baird, a London-based analyst at Oriel Securities Ltd. with a “hold” rating on Henderson. “That needs to turn around.”

U.K. retail funds had net outflows of about 100 million pounds a month since the start of the year and the firm’s U.S. products also suffered outflows, Formica said. That has been partially offset by flows into its European funds, he said.

“I am obviously disappointed with the headline number of net fund flows,” Formica said. “Clients, driven by the market uncertainty, reduced exposure to risk assets across the board.”

The stock fell 1.3 percent to 126.7 pence at 9:30 a.m. in London, valuing the firm at about 1.4 billion pounds. The shares have climbed 23 percent since the beginning of the year.

Gartmore Purchase

The fund manager’s purchase of Gartmore last year helped the firm post a bigger-than-estimated gain in full-year profit in 2011. Underlying net income, which excludes costs related to the Gartmore acquisition, climbed 56 percent to 125.7 million pounds, the London and Sydney-listed company said in a statement today. That beat the 122.5 million-pound estimate of 11 analysts surveyed by Bloomberg.

The Gartmore acquisition helped Henderson to raise the average fee it charges clients because it added hedge funds and individual investors, who typically pay more than institutional investors and pension funds. The firm’s operating margins widened to 36.3 percent last year from 30 percent in 2010.

Assets under management rose 4 percent to 64.3 billion pounds over the 12-month period as the addition of the Gartmore funds offset Henderson’s outflows.

Henderson said 59 percent of its funds outperformed their benchmarks over one year, compared with 70 percent in 2010. Over three years, 66 percent of funds beat their benchmarks, up from 62 percent a year ago.

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