Profit soars but Henderson chief says euro crisis still hitting flows

THE CHIEF executive of fund manager Henderson has warned more clients could pull their cash this year as the Eurozone crisis buffets the industry.

The Anglo-Australian firm reported net outflows of £6.4bn during last year and Andrew Formica told City A.M. the pattern would not be reversed quickly.

“There is still a lot of nervousness out there... The ability of world growth to get underway is being hampered by the dithering in the Eurozone but the US is starting to develop an improved outlook.

“We still have the potential for further outflows but at a more modest rate.”

Formica said much of last year’s outflow was due to exits from European and US mutual funds as well as the loss of some institutional mandates. The UK retail book remained “relatively stable” through last year’s market turmoil, he added.

Despite market turbulence leading to a hard year for the industry, Henderson said contributions from Gartmore, the rival it bought last year, had pushed up profit.

Underlying pre-tax profit jumped 58 per cent to £159m as Gartmore’s boost and broader corporate cost controls helped increase Henderson’s operating margin to 36.3 per cent.

The absorption of Gartmore also helped boost Henderson’s management fees by 28 per cent to £360.5m and transaction fees were up 39 per cent to £51.1m.

“The acquisition of Gartmore has exceeded our expectations on all metrics,” Formica said.

Henderson’s hedge funds contributed a 52 per cent lift in performance fees to £65.2m.

The board recommended a final dividend of 5.05 pence, resulting in an 8 per cent increase in the total dividend.