Investment firm M&G launches voluntary redundancy programme to slash costs as profits slump
- M&G said the redundancies should help it cut costs by 10%
- It saw investors withdraw £7.5bn from its fund management arm last year
- That has helped send the firm’s profits tumbling 29 per cent to £1.15bn
- This is its first full set of results since splitting from Prudential last year
Fund manager M&G has launched a voluntary redundancy programme as it saw annual profits slump by nearly a third after investors withdrew more cash.
In its first set of results since splitting from Prudential last year, the group said the redundancies should help it cut costs by 10 per cent, although it did not specify how many jobs are expected to go.
It comes after M&G saw investors withdraw some £7.5billion from its funds last year as investors shifted away from active stock pickers.
That helped send profits tumbling 29 per cent to £1.15billion, which was in line with expectations.
M&G said the redundancies should help it cut costs by 10%
Overall, the company saw net outflows of £1.3billion from its savings and asset management division last year, as the outflow from its funds was partly offset by inflows of £6.2billion into its savings business, which includes the PruFund.
‘Active managers continue to face pressure on profitability because of the popularity of passives and changes in the distribution landscape,’ M&G said.
It comes as another fund manager, Aberdeen Asset Management, today said it continued to see heavy withdrawals, which sent its pre-tax profits fall 10 per cent last year.
M&G, which employs around 5,600 staff in the UK and worldwide, is leading a turnaround to help address the industry challenges.
These, it said, include ‘reducing costs through restructuring and by concentrating our resources on areas where client demand is rising and profit margins are resilient’.
‘As part of this programme, we have launched a voluntary redundancy scheme with the aim of reducing total staff costs by 10 per cent in 2020,’ the group added.
M&G was recently forced to suspend its £2.5billion property fund after seeing a mass exodus of client cash.
Prior to the suspension in December, industry tracker Morningstar said around £750million was drawn out of M&G’s property portfolio during the first eight months of 2019.
M&G is previously the UK business of insurer Prudential, which was spun off in a bid to separate from the rest of the insurer’s mainly Asia-focused business.