Michael McLintock, Will Nott, Simon Pilcher and Grant Speirs

Transcription

1 M&G Overview & Performance Michael McLintock, Will Nott, Simon Pilcher and Grant Speirs 1

2 M&G Agenda g M&G Group overview Michael McLintock M&G Retail Will Nott M&G Fixed Income Simon Pilcher M&G Group Financials Grant Speirs 2

3 M&G s strategic priorities People Performance Sales & profits 3

4 M&G Group overview 191bn FUM invested in equities, fixed income and property* 83bn external funds Manage global assets predominantly on behalf of UK and European investors Pre-tax profit of 177m (2009 results) 122m (H1 2010) *as at 30 September

5 M&G Group Devolved business structure with centralised support M&G Investments Retail 102m PBT Equities Fixed Income 43m PBT PruPIM* PPM** South Africa Will Nott Simon Pilcher Shared services including Risk, Compliance, Operations *Prudential Property Investment Management **Prudential Portfolio Managers South Africa 5

6 Our market-leading position Net UK retail sales 2 nd quarter nd quarter th quarter rd quarter 2010 TOP TEN NET RETAIL SALES Second Quarter 2007 ( m) Invesco Perpetual 1,143.6 Schroder New Star SWIP Artemis Jupiter BlackRock k Standard Life M&G Investec TOP TEN NET RETAIL SALES S TOP TEN NET RETAIL SALES TOP TEN NET RETAIL SALES S Second Quarter 2008 ( m) Fourth Quarter 2008 ( m) Third Quarter 2010 ( m) BlackRock M&G 1,003.9 M&G 1,282.5 Invesco Perpetual Invesco Perpetual BlackRock 1,032.3 SWIP M&G Jupiter Mellon First State Halifax Threadneedle Martin Currie Jupiter SWIP BNY Mellon BlackRock Cazenove Neptune Schroder First State Standard d Life Inv BNY Mellon First State Invesco Perpetual Schroder SWIP HSBC AXA consecutive quarters at number 1 for gross and net UK Retail sales Source: Pridham Report 6

7 2 nd largest UK retail fund manager UK retail FUM bn Jan UK retail FUM bn end September Bla lackrock Invesco Perpetual Fidelity Jupiter Scottish hwidows M&G Threa eadneedle Schroders Capita Finance L&G Blac lackrock Invesco Perpetual M&G Fidelity Jupiter Threa eadneedle Scottish hwidows L&G St. James es' Place Schroders 119% growth in FUM in under 3 years Source: IMA 7

8 How have we achieved this position? Strength across key asset classes in the UK Est. net sales year ending Sept 10 ( m) 1, M&G Recovery Fund SWIP UK Enhanced Equity BlackRock Collective Investment Funds - UK Equity Tracker SWIP Foundation Growth Prudential UK Number 1 money taker in UK equities Growth L&G (N) Tracker UK Tracker Trust AXA Framlington UK Select Opportunities Fund Source: Lipper FMI - Lipper FundFile as at end-september Figures in GBP. M&G data sourced internally and based on UK retail sales only (excluding internal flows) BlackRock UK Special Situations JOHCM UK Opportunities Fund Newton Income Fund 8

9 How have we achieved this position? Strength across key asset classes in the UK Est. net sales year ending Sept 10 ( m) Newton Global Higher Income Aberdeen World Equity M&G Global Basics Fund St James's Place Worldwide M&G Global Dividend Fund Sarasin EquiSar Global Thematic Vanguard FTSE Developed World Schroder QEP Global Active Value Neptune Global Equity Fund Opportunties Unit ex-u.k. Equity Index Trust Fund Number 1 money taker in global equities Source: Lipper FMI - Lipper FundFile as at end-september Figures in GBP. M&G data sourced internally and based on UK retail sales only (excluding internal flows) Jupiter Merlin Worldwide Portfolio 9

10 How have we achieved this position? Strength across key asset classes in the UK Est. net sales year ending Sept 10 ( m) 1,200 1, , M&G Strategic Corporate Bond M&G Optimal Income Fund L&G Dynamic Bond Henderson All Stocks Credit Santander Sterling Corporate Bond Aviva Investors Corporate Bond Number 1 money taker in Fixed Interest SWIP Sterling L&G High IP Tactical Henderson Fidelity Standard Life Henderson Fidelity Credit Income Bond Fund Strategic Bond Strategic Bond Select Income Long Dated Moneybuild Advantage Credit Income Please note that LV= Short Dated Corporate Bond and LV= Medium and Long Dated Corporate Bond have been removed from the top selling fund list as the majority of the funds estimated net sales over the latest year are sourced from internal seed capital. Source: Lipper FMI - Lipper FundFile as at end-september Figures in GBP. *UK IMA fixed income sectors consists of the IMA Corporate Bond, IMA Strategic Bond, IMA High Yield and IMA UK Gilts sectors. M&G data sourced internally and based on UK retail sales only (excluding internal flows). Cazenove Strategic Bond 10

11 How have we achieved this position? Strength across key asset classes in the UK Est. net sales year ending Sept 10 ( m) M&G Property SWIP Property Threadneedle Ignis UK L&G UK Aviva Investors Schroder Skandia Clerical Aviva Investors Portfolio Trust UK Property Property Fund Property Trust Property Global Property Property Fund Medical UK Asia Pacific Trust Number 1 money taker in Property Source: Lipper FMI - Lipper FundFile as at end-september Figures in GBP. M&G data sourced internally and based on UK retail sales only (excluding internal flows). Securities Property Property Fund 11

12 M&G Fixed Income One of the largest fixed income investors in Europe 2006: 15% of top 40 UK pension funds 2009: 70% of top 40 UK pension funds Dynamic and innovative investment approach Pioneer new investment products and thinking 12

13 How have we achieved this position? Investment-led Stable team with low turnover Strong identity around culture and brand Single fund management centre Focus on organic growth 13

14 M&G Group Recognition for our investment leading gpropositionp Outstanding Investment House (UK) 14

15 M&G Retail Will Nott, CEO M&G Securities 15

16 M&G Retail fund performance Long term performance remains strong Rolling 3 year Retail fund performance 100% 62% retail funds above median 90% Top quartile over 3 years 80% 70% 60% 50% 40% 30% 20% 10% 0% S-08 O-08 N-08 Upper quartile Lower quartile Bottom quartile D-08 J-09 F-09 M-09 A-09 M-09 J-09 J-09 A-09 S-09 O-09 N-09 D-09 J-10 F-10 M-10 A-10 M-10 J-10 J-10 A-10 S-10 Investment performance is fundamental to success Source: M&G management information 60% equity funds above median over 3 years 67% retail fixed income funds above median over 3 years 16

17 M&G Retail today Transformation of the Retail business since M&G Retail net sales 2000 end Sept 2010 ( bn) Sa ales bn YTD 2010 Source: M&G management information 17

18 Transformation of M&G Retail s asset base Strong ggrowth despite a challenging gexternal environment tail external FUM bn Growth of M&G Retail external FUM 2001 end Sept 2010 ( bn) 19.9bn FUM Nov bn FUM Sep -10 M&G Re 10 0 Jan- 01 Jul- 01 Jan- 02 Jul- 02 Jan- 03 Jul- 03 Jan- 04 Jul- 04 Jan- 05 Jul- 05 Jan- 06 Jul- 06 Jan- 07 Jul- 07 Jan- 08 Jul- 08 Jan- 09 Jul- 09 Jan- 10 Jul- 10 Source: M&G management information 18

19 Improving the diversification of the business By country FUM UK vs. International 2001 FUM UK vs. International 2005 FUM UK vs. International to 30/9/10 INTERNATIONAL INTERNATIONAL UK UK UK Total FUM 11.5bn Total FUM 13.9bn Total FUM 35.9bn Expansion into Europe diversifying the asset base Source: M&G management information 2001 and 2005 data as at end Dec 19

20 Improving the diversification of the business By asset class FUM by asset class 2001 FUM by asset class 2005 Multi Asset Multi Asset Property t FUM by asset class 2010 to 30/9/10 Property Multi Asset Bond Equity Bond Equity Bond Equity Total FUM 11.5bn Total FUM 13.9bn Total FUM 35.9bn Strong growth in fixed income assets Source: M&G management information 2001 and 2005 data as at end Dec 20

21 Looking ahead Significant prospects p for future growth Size of Fund market (FUM at end 2009) M&G Retail Market share UK 481bn 4.9% Europe 4,118bn 0.1% Opportunities for M&G Retail even without underlying market growth Source: IMA, EFAMA 21

22 Opportunities for asset managers European distribution is opening up p p g p We have to work together to identify ways in which we can raise standards and transparency across Europe Financial Secretary to the Treasury, Nov 2010 Transparency and being open and honest with clients is a crucial differentiator for asset managers The issue of restoring trust will be dependent on creating more transparency in the industry FT January

23 M&G Fixed Income Simon Pilcher, CEO Fixed Income 23

24 M&G Fixed Income Using management of internal assets as a platform for external growth g g p g Internal Institutional Deliver outstanding Utilise skills developed investment returns to primarily for internal in-house capital through client to build new investment in innovative business streams and and attractive ti areas of the diversify if revenues capital markets Active fund management, particularly credit 24

25 M&G Fixed Income A broad and growing gclient base 256 mandates 224 clients 22 have two mandates 6 have three mandates or more Other clients from 26 countries - sovereign wealth funds, insurance companies and local governments 25

26 M&G Fixed Income Performance is a key component of success Institutional All Stocks Corporate Bond Fund High June 2010 Rolling 3 year return and tracking error (to 30 June 2010) Return June 2007 Getting the risk/return blend right The roller coaster year 2 years 3 years 5 years All the benefits of passive management, but with active fees Low returns / high volatility Fund Benchmark 0 1.7% p.a. 2.0% p.a. 1.7% p.a. 1.1% p.a. Low Risk High 100% of mandates ahead of benchmark in 3 years to Sept 2010 Sources: M&G, Mercer MPA, 30 June

27 M&G Fixed Income Net sales history 7,000 M&G Fixed Income net sales 2003 end Sept 2010 ( bn) 6,000 5,000 4,000 3,000 2,000 1, Ytd Q Ytd Q Sources: M&G, management information 27

28 M&G Fixed Income Growth in external revenues 120 M&G Fixed Income revenues m d Income rev venues m M&G Fixe Internal External Sources: M&G, management information 28

29 M&G Fixed Income Innovation enhances reputation, builds trust and helps to grow client base Social Housing Real Estate Debt Fund Secured Property Income Fund 29

30 Secured Property Income Fund What makes long lease property p so attractive? Pension schemes need inflation-linked income Long dated d bonds are natural investments t but: index-linked Government bonds are very expensive increased supply of Government bonds may impact returns conventional corporate bonds offer no direct inflation protection Long lease property can offer: predictable cash flows long duration increasing inflation-linked income security of owning the underlying real estate potential for capital gain 30

31 Secured Property Income Fund Example of long term bond-like income from property p Let to Tesco Property Nominees Ltd with guarantee from Tesco Plc, rated A- 25 year lease with Tesco responsible for insurance and all repairs Rent increases annually linked to RPI with a floor of 2% and cap of 5% for first 5 years and 0% to 5% thereafter Adjoins larger retail park with 26 leading retailers Tesco pay per sq.ft but rents next door are per sq.ft. Tesco planning consent is open A1 with food but next door is open A1 non food 31

32 M&G Group Financials Grant Speirs, Group Finance Director 32

33 M&G Group Consistently strong net flows; exceptional in 2009 and M&G Group net sales 2003 end Sept 2010 ( bn) ,962 5, , ,998 2,238 7,517 2,517 1,312 5,700 5,117 1,587 3,104 2,720 1,169 1, , Ytd Q Ytd Q Retail Institutional Sources: M&G, management information 33

34 Jun-10 Sep-10 M&G Group Record FUM levels 200, ,000 June 2007 i d 160, previous record - 140, , bn September 2010 new record 191bn 100,000 80,000 60,000 40,000 20, Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Internal External Institutional External Retail Despite FTSE All Share level being 16% lower Sources: M&G, management information 34

35 M&G Group Focus on growing g higher margin external FUM FUM Average net fee rates External Retail* External External Institutional 46bn 37bn 87 bps 36 bps Internal 108bn 11 bps * Retail fees are gross annual management charges less rebates and commission payments Sources: M&G, management information 35

36 M&G Group Strong ggrowth in profits: outperforming markets 250 M&G Group profit history 2003 end Jun 2010 ( m) H H Underlying profit Performance Related Fees/Carried Interest FTAS* UCP** * Full year average FTAS index rebased to 2003 (closing price adjusted for dividends and splits) ** Average Sterling Corporate & Collateralised All Stocks TR Index (UCP0) Index rebased to 2003 Sources: M&G, management information; Bloomberg 36

37 Cost: Income ratio Good cost discipline through the cycles Cost to income ratio 2005 end June 2010 Excellent profit margins in 90 comparison to our peers H H Scaleable business operating platform generates operational efficiencies Sources: M&G, management information, full year 2009 competitor data Morgan Stanley research M&G 36.7% Schroders 25.0% Aberdeen 22.7% Henderson 27.6% F&C 27.0% Gartmore 24.5% 36% of current cost base is variable 37

38 2 nd largest UK retail fund manager 40 UK retail FUM bn Jan UK retail FUM bn end September Bla lackrock Invesco Perpetual Fidelity Jupiter Scottish hwidows M&G Threa eadneedle Schroders Capita Finance L&G Blac lackrock Invesco Perpetual M&G Fidelity Jupiter Threa eadneedle Scottish hwidows L&G St. James es' Place Schroders 119% growth in FUM in under 3 years Source: IMA 7