By Muvija M
(Reuters) - British asset manager Jupiter Fund Management (L:JUP) said on Wednesday its assets under management fell 18.3% in the quarter to end-March as fears over the coronavirus pandemic rattled financial markets.
The sharp fall in assets is set to be mirrored by many other money managers in the coming weeks after the widespread lockdowns of hundreds of millions of people in response to the virus teed up a deep recession and caused markets to tank.
Total assets at the end of March were 35 billion pounds, down from 42.8 billion at the end of December, hit by 2.3 billion pounds of net outflows and market losses of 5.5 billion pounds, Jupiter said in a statement.
"Jupiter has faced challenging market conditions, largely brought about by the global coronavirus (Covid-19) pandemic, which has had a significant adverse impact on the economy, global financial markets including asset values and, consequently, on our AUM," the company said.
Even worse hit, though, was Merian Global Investors, the smaller rival that Jupiter agreed to buy just before the full impact of the coronavirus hit markets.
Assets at Merian fell 6.8 billion pounds to 15.7 billion pounds, led by markets falls and with net outflows of 2.6 billion pounds, prompting Jupiter to lower some of the expected benefits of the deal.
Due to the decline in Merian's assets, the estimated run-rate net management fees for Merian at the end of March were around 98 million pounds a year, down from around 140 million pounds at the end of December.
After previously flagging a run-rate operating margin of between 50%-60%, Jupiter said the lower end of the range would now be 40%. Despite that, Jupiter said it still backed the deal.
"Despite the market volatility which both firms have experienced, the strategic and financial rationale of the Acquisition remains compelling.
"The Jupiter Board believes this Acquisition will enhance the Group’s position as a leading UK asset manager, providing increased scale and diversification into attractive new product areas and creating stronger future growth prospects for the Enlarged Group."