OMGI DELIVERS STRONG 2014 RESULTS


LONDON, 27 February 2015

OLD MUTUAL GLOBAL INVESTORS DELIVERS STRONG 2014 RESULTS

Doubling profits and substantially increasing sales and assets under management

Old Mutual Global Investors continued to deliver on its vision to become one of the UK’s leading asset management houses with strong results for the year ending 31 December 2014.

Julian Ide, CEO of Old Mutual Global Investors, comments:  “I am delighted with Old Mutual Global Investors’ success in 2014. It was a year of great change and, from the outset, we set ourselves ambitious targets and we often exceeded these goals.  We will remain very focused on developing our investment-centric business model of delivering positive outcomes for our global client base.   We now have strength and depth across all our investment teams and a global platform to support customers in key parts of the world.

“We have had a good start to 2015 and relish the challenges which lie ahead. This year we will continue to build our business together with the rest of Old Mutual Wealth and third party distribution clients.  We will continue to build our single strategy, multi-asset solutions and alternatives capabilities to reflect the changing demand for pre and post retirement products.”

Financial results:

Old Mutual Global Investors delivered strong organic growth and financial results. The completion of the acquisition of a 50% stake in Intrinsic Cirilium Investment Company Limited (‘Cirilium’) also made a significant contribution to Old Mutual Global Investors’ financial results for H2 2014, adding £2 million of profit and increasing assets under management by £2 billion.

  • Adjusted Operating Profit (‘AOP’) up 120% to £33 million (2013: £15 million)  
  • AOP Margin up to 25% (2013: 15%) 
  • Gross sales up 22% to  £9.2 billion (2013: £7.6 billion)
  • Net Client Cash Flow (‘NCCF’) up more than 250% to £2.5 billion (2013: £0.7 billion)
  • Assets under management up 31% to £21 billion (2013: £16.0 billion) and by 52% since 2012 (£13.8 billion¹)
  • 80% of NCCF delivered through UK third parties. 

Investment performance:

As well as delivering strong financial results for shareholders, a key objective is to continue to deliver strong investment returns for customers.  The results for 2014 were pleasing and reflect the business’s cultural focus on excellence: 

  • 70% of core funds delivered top quartile performance, with 84% being above median over three years²
  • Over 30 industry awards over the last two years, including Global Investment Group of the Year at the 2014 Investment Week Fund Manager of the Year Awards and Best Investment Fund Provider at the 2014 Investment Life and Pensions Moneyfacts Awards
  • Recognised by Fund Calibre as being ‘The Most Consistent Global Fund House’ with 87.5% of funds out performing their sectors over 5 years³.  

Most of investment desks achieved positive flows, with the business continuing to build leadership positions in UK Equities, Asian Equities, Multi Asset Solutions, Global Equities and Absolute Return.  The Old Mutual Global Equity Absolute Return (GEAR) fund was the top selling fund in 2014 with gross sales of £1.7 billion, demonstrating its popularity with investors as equity markets remain volatile. The Old Mutual UK Alpha fund was the next most popular investment choice in 2014 with sales of £1.1 billion. The multi-asset Spectrum fund range delivered £620 million of gross sales in the year and sales into WealthSelect were £770 million in 2014.    

Old Mutual Global Investors also invested heavily in new investment capabilities including its Fixed Income team. The appointment of the Fixed Income Absolute Return Team, headed by Russ Oxley, as well as plans to set up an Edinburgh office in Q2 2014, signifies ambitious plans to expand its share of the absolute return market.

Strategic objectives:

Old Mutual Global Investors aspires to be a leading, modern asset management business focused on the needs of investors.  Significant progress has been made to further the goal of being a Top 5 player in the UK retail market:

Modern operating platform – a restructuring of the operating platform (which will complete during 2015)

Transparency - the implementation of a fixed expense charging structure for UK domiciled funds to improve transparency around fund charges for customers

Distribution - ranked 6th for total net UK retail sales, 10th total UK gross retail sales and 5th for net offshore retail sales in Q4 2014 in the Pridham Report for 2014 - a major jump from 2012 where the business featured in the 20’s region.  In addition, growth of the Alternatives business contributed significantly to profits.

International growth:

Substantial progress was made in 2013/2014 to restructure and grow the business’s global footprint. During 2014, the business launched several key products including:

  • The Old Mutual Pan African Fund managed by Old Mutual Investment Group, South Africa
  • The Old Mutual Foundation range of funds  – a fettered multi-asset fund range, managed by John Ventre
  • The Old Mutual Monthly Income High Yield Bond Fund, managed by Christine Johnson and Bastian Wagner
  • The Old Mutual Europe (ex UK) Smaller Companies Fund, managed by Ian Ormiston, appointed to the newly created role of European Smaller Companies fund manager
  • US$400 million insourced in Q4 2014 into the Old Mutual Greater China Equity, Asian Equity and Pacific Equity Funds, managed by the newly appointed Asian Equities Team, headed by Josh Crabb.  Subject to regulatory approval, this Team will operate from Hong Kong from Q2 2015.

The significant expansion of the global distribution capability resulted in an increase in asset flows from some of the world’s leading distributors:

  • Signed an agreement with AIVA in Latin America, which now includes 4 Americas sales personnel covering the region
  • Completed the build-out of the Asian Distribution Team, under the leadership of Carol Wong, including a distribution team of 8 in Hong Kong and a strong relationship with Capital Gateway, a Master Agent in Taiwan
  • Appointed a leading Asian Equities Team – including Josh Crabb and Diamond Lee
  • Hired Allan MacLeod as Head of International Distribution to lead the Global Financial Institutions strategy and build out Old Mutual Global Investors’ European footprint.

Old Mutual Wealth:

Growing demand for customer focused investment solutions since the Retail Distribution Review helped Old Mutual Wealth record an adjusted operating profit of £227 million in 2014 (2013: £217 million), an increase of 5% on the prior year.

NCCF of £3.7 billion in 2014 (2013: £2.3 billion) was 61% higher than prior period driven by strong demand for investment solutions from Old Mutual Global Investors and the new WealthSelect investment service on the Old Mutual Wealth platform. Gross sales increased by 11% to £16.0 billion (2013: £14.4 billion) and funds under management hit a new high of £82.5 billion at the end of 2014 due to good fund performance and strong NCCF across the year (2013: £78.5 billion).

Old Mutual Wealth has made significant progress on its strategy to build an integrated wealth management business.  It acquired Intrinsic and Quilter Cheviot and now has an integrated customer offering encompassing financial advice, platform and products, investment management and asset management.

-       ends –

Media Contacts:

Old Mutual Global Investors:

Vee Montebello, Head of PR and Internal Communications                   + 44 20 7 332 7687

Amelie Shepherd, PR Executive                                                                  + 44 20 7 332 8345

Old Mutual Wealth:

Charlie Musson, Head of Corporate Communications                             02380 916 099

Notes to Editors:

1 AUM GROWTH BY FUND:

  

AUM growth millions (GBP) 

  

Snapshot of OMGI funds increasing AUM during 2014 

31 Dec 13 

31 Dec 14 

INCREASE % 

OM Global Equity Fund

35

186

431%

OM Global Equity Absolute Return Fund

348

1,805

419%

OM Monthly Income Bond Fund

47

159

238%

OM North American Equity Fund

236

656

178%

OM UK Equity Income Fund

73

156

114%

OM UK Alpha Fund

1,052

1,873

78%

2 GROSS SALES INTO OMGI FUNDS:

  

Millions (GBP) 

  

Snapshot of gross sales into OMGI funds: 

31 Dec 13 

31 Dec 14 

INCREASE % 

OM Global Equity Absolute Return Fund

388

1,715

341%

OM UK Alpha Fund

938

1,139

21%

OM North American Equity Fund

181

466

158%

OM Global Equity Fund

47

185

293%

OM Monthly Income Bond Fund

46

158

240%

OM UK Equity Income Fund

81

155

90%

3 ASSET CLASS BREAK DOWN SINCE 2012:

Old Mutual Global Investors has expanded its core investment capabilities and successfully moved to higher margin asset classes by decreasing the number of sub-advised assets, insourcing several asset classes to its investment teams or to other asset managers within the Old Mutual Group.

Asset Class

AUM £ millions (GBP)

AUM %

Dec 2012

Dec 2014

Dec 2012

Dec 2014

Absolute Return

400

2,200

4

11

Equities

2,600

6,800

19

32

Fixed Income

2,200

1,700

16

8

Multi Asset Solutions

5,000

 

7,200

35

34

Sub-Advised*

3,600

1,900

26

9

Select Funds**

0

1,100

0

6

*  Single manager funds which are sub-advised to external  investment advisers

** Select funds relates to 24 Old Mutual Global Investors’ sub-advised to strategic partners

4 INVESTMENT PERFORMANCE:

Old Mutual Global Investors continued to deliver strong investment performance – 70% of core funds top quartile and 84% are above median over three years ².




  

Cumulative Performance to

31 December 2014

 

Funds 

1 Year 

3 Years

5 years

 
 

OM Global Equity Fund

MSCI Benchmark

IMA Global Sector Average

14.9%

11.5%

7.1%

80.6%

53.5%

42.8%

108.4%

68.3%

49.8%

 

OM Global Equity Absolute Return Fund

(USD I Share Class)

1 month LIBOR USD Benchmark 

9.1%

 

0.16% 

30.3%

 

0.60%

47.2%

 

1.11%

 

OM North American Equity Fund

MSCI North America Benchmark

IMA North America Sector Average

22.9%

18.9%

17.9%

81.1%

65.8%

65.3%

131.9%

98.6%

89.8%

 

OM UK Alpha Fund

FTSE All Share Benchmark

IMA UK All Companies Sector Average

1.24%

1.18%

0.85%

62.99%

37.27%

47.16%

79.35%

51.76%

61.18%

 

Source: Factset © 2013 Morningstar.  All rights reserved.  For more information on the Fund please see factsheets as www.omglobalinvestors.com

¹as at 31 December 2012

 ² Source: Old Mutual Global Investors.  OMGI Core Funds - performance weighted by AUM over 3 years 31 December 2014. Excludes Hedge funds and Mandates and funds where no Peer group defined.

³Source: Fund Calibre Fund Management Index (18 December 2009 to 18 December 2014)

Important information: For professional use only. Past performance is no guarantee of future results. The value of an investment and the income from it can fall as well as rise and investors may not get back the amount originally invested.

Old Mutual Global Investors (OMGI) has no house market view and opinions expressed are the views of individual fund manager(s) as at the time of writing. These views may no longer be current and may have already been acted upon. Any underlying research or analysis has been procured by OMGI for its own purposes and may have been acted on by OMGI or an associate for its or their own purposes.  Old Mutual Global Investors (UK) Limited is the appointed investment adviser for Old Mutual Investment Management Limited’s in-house funds. Old Mutual Global Investors is the trading name of Old Mutual Global Investors (UK) Limited and Old Mutual Investment Management Limited. Old Mutual Investment Management Limited, Millennium Bridge House, 2 Lambeth Hill, London EC4V 4AJ.  Authorised and regulated by the Financial Conduct Authority. Old Mutual Global Investors (UK) Limited, Millennium Bridge House, 2 Lambeth Hill, London EC4P 4AJ. Authorised and regulated by the Financial Conduct Authority. A member of the IA. Telephone calls may be recorded for security purposes and to improve customer service. OMGI 02/15/0123.