Articles

The Fund Manager’s Dilemma: Sales and Revenue Growth Becoming Disconnected as Competition for MPS Mandates Puts Pricing Front and Center

The third quarter saw over £57.3 million in 12-month forward-looking revenue1 won by underlying fund managers within the UK’s platform model portfolio (MPS) business. Close to £57.5 million, however, was lost via gross redemptions of investment funds.

MPS net flows therefore contributed to an approximate £200k loss in annual projected revenues for fund managers. Even though MPS net sales were positive to the tune of more than £3.1 billion in the quarter.

So, how could £3.1 billion in net flows generate a negative revenue impact? Front and center to this story was the equity asset class. While equity net sales accounted for nearly £2.5 billion of the £3.1 billion total, these net sales only generated an additional £1 million in projected annual revenue.

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Authored By

Benjamin Reed-Hurwitz, EMEA Research Lead, ISS Market Intelligence

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