Funds under management (FUM) stood at £102.3 billion at the end of the quarter, boosted by the acquisition of Quilter Cheviot which completed during the period and added £17.5 billion. Excluding acquisitions and disposals, funds under management increased 5% from the year end due to positive NCCF and strong market performance.
NCCF on the UK Platform of £0.6 billion was 18% higher than prior year (Q1 2014: £0.5 billion) and gross sales of £1.4 billion were 15% higher (Q1 2014: £1.3 billion). ISA sales were strong over the tax year end and pension sales of £0.6 billion were 40% up on previous year as people transferred to the Platform to take advantage of the wide range of investment solutions and flexible income options. UK Platform assets were £33.0 billion, up 7% since the start of the year (December 2014: £30.8 billion).
Demand for financial advice also increased significantly due to the incoming pension reforms with pension and annuity sales at Intrinsic up 23% compared to Q1 2014. Overall, total sales at Intrinsic were up 65% in Q1 2015 as it continues to recruit high producing financial planners into its network.
Sales of fund ranges managed by Old Mutual Global Investors (OMGI) were strong during the quarter. NCCF into the Cirilium fund range via Intrinsic was £0.2 billion, double that achieved in Q1 2014, and WealthSelect added £0.3 billion via the UK Platform in Q1 2015 compared to a quarterly run rate of £0.2 billion over 2014.
OMGI gross sales of £2.6 billion were up 5% on last year (2014: £2.5 billion). NCCF of £0.8 billion is 27% down on prior year (2014: £1.1 billion), with Q1 2014 including a £180 million segregated mandate inflow and £305 million seeding of the Foundation fund range. The Global Equity Absolute Return fund continued to perform well, and has again been the top selling fund in the quarter with net inflows of £0.6 billion.
OMGI investment performance remains very good, with 60% of core funds in the first quartile over a three-year period and a total of 84% of funds above the median. OMGI FUM was £22.5 billion, up 7% on the start of the year (December 2014: £21.0 billion) and now represents 22% of the total Old Mutual Wealth FUM.
Old Mutual Wealth also performed well in its international markets during Q1. Old Mutual International’s NCCF of £128 million is 44% higher than prior year (2014: £89 million) and gross sales of £0.5 billion were 10% higher (2014: £0.4 billion). In January, it launched its Wealth Management Plan in Hong Kong to take advantage of the new regulations in that market.
NCCF of £178 million in Old Mutual Wealth Italy was significantly higher than prior year (2014: £25 million). Gross sales of £0.4 billion are 56% higher than the same period in 2014 (2014: £0.2 billion) following an expansion of a distribution agreement with a major bank. The sale of businesses in France and Luxembourg to APICIL completed on 2nd February 2015.
Paul Feeney, chief executive officer at Old Mutual Wealth, comments:
“The pension freedoms have been like a shot of adrenaline to the financial services industry. Even before they were introduced we saw increased demand for financial advice, flexible pension products and packaged investment solutions as people got ready for the changes. Our research shows that 81% of over-55s are aware of the new freedoms, indicating the reforms will encourage more people to take advantage of the benefits of saving into a pension. We hope the new Government will recognise the benefit of continuity – further changes risk dampening appetite for long-term saving and creating additional complexity in the pension taxation system.
“One thing that is very clear is that we will continue to see strong demand for financial advice this year as people embrace new and more flexible ways of funding the later parts of their lives.”
Old Mutual Wealth data tables for the three months ended 31 March 2015
Gross sales and funds under management (£bn)
¹ UK Platform FUM excludes intra-Group assets from our International business of £1.4 billion at 31 March 2015 (31 March 2014: £1.5 billion)
² Includes Protection, Series 6 pensions and UK Institutional business
3 OMGI FUM includes £0.2 billion of shareholder assets (Q1 2014: £0.1 billion).
4 The acquisition of Quilter Cheviot was completed on 25 February 2015. Market and other movements include £17.5 billion of acquired FUM
5 Includes business written in Italy and divested businesses in France & Luxembourg (sold in February 2015) and Poland (sold in May 2014)
6 Includes UK Heritage, Switzerland and divested businesses in Germany, Austria and Liechtenstein (sold in Q4 2014)
7 The elimination represents the removal of double-counting of assets and flows managed by OMGI on behalf of other Old Mutual Wealth businesses. In Q1 2014, there was £0.3 billion seeding of the Foundation fund range