M&G: Two thirds of AUM must perform better.
According to M&G, 60.8 percent of its managed assets (AUM) need to improve their investment performance, while 4.4 percent were rated as "unsatisfactory".
These numbers have increased since 2021, when M&G determined that 0% of AUM had unsatisfactory investment performance and 59.2% needed to improve.
As of December 31, 2021, M&G had a total AUM of €439.5 billion.
Overall fund ratings for 2022, though, improved from the previous year.
These also take into account other aspects besides investment performance, such as service quality, scale economies, and authorized fund manager costs.
The firm was judged to be delivering value on nearly all of its AUM (95.8%), a slight increase from 92.1 percent in 2021.
The €1.46 billion M&G Recovery fund and the €19.8 million M&G Absolute Return Bond fund were both found to be unsatisfactory in M&G's annual value assessment report for failing to deliver value to customers.
The main reason for their lack of value was that the results of the investments did not live up to expectations.
Despite a new portfolio manager and an updated investment strategy, the M&G Recovery fund's performance has consistently lagged behind expectations.
In contrast, the report found that the €141 million M&G Japan Smaller Companies fund provided "outstanding value" as a result of its outstanding investment results.
The report's explanation of the investment performance read, "We would observe that many of M&G’s funds (particularly the equity funds) follow a ‘value’ investment approach, whereby managers look for mispriced opportunities among lowly valued stocks."
"For more than a decade, this style of investing has encountered headwinds as investors have tended to favour higher quality stable businesses and fast growing, technology-focused stocks. This challenging investment environment has had a significant influence on several funds’ longer-term performance outcomes, even though shorter-term performance might be robust."