Integration of Gartmore is going well but risks of market paralysis remain

HENDERSON’S figures held little surprise, having been flagged for months, but its warning on the effect of the current market carnage hit home yesterday.

Henderson hiked its performance fee income, made great progress integrating Gartmore, and cut its costs. But the volatility in equities still has the potential to hold back future performance, it admitted.

Andrew Formica warned that investors were shaken by the events of the past two weeks, and said the “psychological effects” of the market turbulence would put many off investing in the near future. That and more anticipated volatility make for a difficult outlook.

Peel Hunt analysts responded to these views by ditching plans to raise Henderson’s full year earnings forecasts by a hearty ten per cent. The upgrade was based on its excellent figures so far – but they decided on balance that the turmoil is likely to materially prevent Henderson from matching that performance in the rest of the year.

This vulnerability is definitely not unique to Henderson. But it is a nasty reminder that market upset stands to hurt even those who are in a strong position.