Henderson’s CEO Targets Pension Clients as Retail Money Flees

  • Retail investors pull $2.8 billion in Q4 on Brexit, Trump
  • Formica says Janus merger on track to complete in May

Henderson Group Plc, the asset manager merging with Janus Capital Group Inc., said the combined firm will target institutional money for growth after retail investors exited in the aftermath of the Brexit vote and Donald Trump’s presidential election victory.

Individual clients pulled a net 2.2 billion pounds ($2.8 billion) out of Henderson in the final three months of 2016 as they avoided European funds, the company said in a statement on Thursday. That takes total outflows for 2016 to 4 billion pounds. Chief Executive Officer Andrew Formica said the merger with Janus is on track to be completed by May.

“It’s been a testing period for even the most experienced managers,” the CEO said on a conference call. “Both Henderson and Janus have a higher proportion of retail business and that is an issue. The merger gives us a significant opportunity to expand our institutional presence and accelerate plans.”

Henderson has seen retail investors pulling out money since Britain’s shock decision to leave the European Union in June. Worst hit was the firm’s U.K. property fund, which saw about 800 million pounds in outflows and prompted Henderson to temporarily shutter the fund, Formica said. The U.S. business was also affected as clients reallocated money back to U.S. domestic funds after President Trump indicated he would pursue protectionist policies.

By contrast, Henderson’s institutional business saw 854 million pounds of net new money in the fourth quarter. Formica said he expects a “healthy pipeline of net inflows” from institutional clients this year, with consultants allocating more money once the firms’ $6 billion merger is complete.

Henderson fell as much as 3.2 percent in London trading and was down 2.5 percent at 211.50 pence as of 10 a.m. The stock has lost about 10 percent in the last 12 months.

Despite the 2016 redemptions, assets under management climbed 10 percent to a record 101 billion pounds, thanks to a 13 billion-pound boost from currency and market movements, the statement showed. Full-year net income slumped 32 percent to 109.6 million pounds. The board recommended a final dividend of 7.3 pence per share, up from 7.2 pence a year earlier.

Janus last month reported a 34 percent slump in fourth-quarter net income and $300 million of long-term net outflows. Its assets were little changed at $194.5 billion.

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