Asset management:


‘M&G’s objective is to produce superior long-term investment returns for its clients – individual and institutional investors – and its shareholder, the Prudential Group.  It is the commercialisation of this investment performance through the acquisition of new fund flows that produces attractive profits and cashflow for the Prudential Group.’

Michael McLintock
Chief Executive Officer

To find out more about M&G

Prudential has a strategy of optimising the value of M&G’s asset management capabilities by allowing the business to focus on the generation of superior long-term returns for investors.

Through its proven ability to convert investment performance into significant fund flows, M&G is able to increase its exposure to rising markets and so maximise revenue from the long-term stock of funds under management.

The pillars of M&G’s business that support this strategy are:

  • People – an environment that attracts, fosters and retains talented individuals;
  • Performance – an investment-led business focused on the delivery of long-term returns through active investment management;
  • Innovative investment ideas which meet client needs and a proven ability to convert these ideas into significant fund flows; and
  • Diversification by asset class, client type, fund and investment strategy and country.

Performance highlights

M&G external net flows

2013: Total - £9.5bn, of which Institutional £2.1bn, Retail £7.4bn; compared to previous 4 years

*Including £7.6 billion single mandate

M&G European retail funds under management

2013: £23.7bn; compared to previous 4 years

Net cash remittances

2013: £235m; compared to previous 4 years

IFRS operating profit1

2013: £395m; compared to previous 4 years
  • Record external funds under management of £126 billion
  • 64 per cent growth in European retail funds to £23.7 billion under management
  • Record 2013 profits of £395 million
  • Recognised for its investment performance with numerous awards, including Real Estate Manager, Fixed Income Manager and Investment Manager of the Year at both the Financial News Awards 2013 and European Pensions Awards 2013

Market overview

The European asset management market is the second largest in the world with total assets of £5.8 trillion2. Demand for asset management services is expected to continue to grow as governments and employers increasingly pass the responsibility for retirement planning and other long-term savings to individuals. Asset managers with records of strong investment performance and well-regarded brands are in a good position to attract flows of new money.

The UK asset management industry, M&G’s core market, is the second2 largest national market in the world with £770 billion3 of assets and is a global centre of excellence for investment management and a major source of funding for the UK economy.

Across its chosen markets, M&G serves the needs of both retail and institutional investors. Retail clients favour pooled funds such as open-ended investment companies which they buy directly from M&G or more typically through an intermediary such as an independent financial adviser or discretionary fund manager. Institutional clients, such as pension funds and local authorities, invest in multiple ways, from segregated mandates through to pooled funds. They are often attracted to investment strategies originally developed by M&G for Prudential’s long-term insurance funds.

As in previous years, M&G has a strong pipeline of institutional business still to fund. Products designed to help fill the gap left by the decline in long-term commercial bank loans continue to attract considerable interest, while opportunities to lend to medium-sized companies and infrastructure projects are improving.

Regulators across Europe are seeking to improve the quality of investment products and advice, mainly by bringing greater transparency to the industry. In the UK the Retail Distribution Review has led to clearer disclosure of investment charges, as well as ensuring that customers rather than providers pay for advice by outlawing commissions for new business. The full consequences of this guidance, which is not fully effective until April 2014, are still unclear. European policymakers are considering similar changes and some countries have already followed the UK’s lead on commissions, such as The Netherlands.

It is still too early to offer a definitive assessment of the impact of the Retail Distribution Review, although we do expect more focus in the market on price. In the past few weeks, platforms have begun to disclose their own service pricing and any special fund fees agreed with asset managers. Those managers with strong brands and a reputation for investment performance will be expected to better withstand any such pressures on asset management fees.

Open all

M&G’s retail market position

Retail fund markets are highly fragmented, with no single company dominating. This reflects the competitive nature of the business and the multiplicity of providers. By total UK assets under management, M&G is the second largest retail fund manager3 with a market share of 5.5 per cent. In Europe, where M&G has distributed funds for just over 10 years, it has over £23 billion of assets under management and a market share of 0.4 per cent2.

Markets backdrop over the past year

Equity markets in developed countries rose to pre-crisis levels during 2013, while bond markets remained relatively flat. Emerging markets, however, suffered a series of setbacks as concerns about slowing economic growth in China and the tapering of quantitative easing in the US weighed heavily on investor sentiment.

European investors continue to favour fixed income and mixed asset funds, while in the UK the bond sector saw several periods of net redemptions as savers moved more of their money into equities.

A black cab adorned with M&G advertising passes a bus and the London Eye

What we do and how we do it

M&G has been managing money on behalf of investors for more than 80 years. We have long believed that our active approach to investment – selecting stocks on a conviction basis rather than following a market index – produces superior returns over the longer term.

In the retail market M&G operates a range of UK domiciled funds which are now distributed across Europe and Asia. Today, clients outside the UK account for more than a third of M&G’s retail assets under management.

In the institutional market, M&G seeks to leverage investment strategies which have been developed originally for Prudential’s insurance funds in order to attract external business.

Today M&G is an international asset manager with operations in 18 countries and retail products which are distributed in 20 jurisdictions.

Our success is evident in the fact that we have achieved positive external net flows for 11 years in a row, reflecting the attractiveness of our diverse fund offering and strong investment performance delivered for our customers. M&G recorded net flows of £9.5 billion during 2013 compared to net flows of £16.9 billion in 2012, a record level which included a single low-margin institutional mandate of £7.6 billion. Included in 2013 net flows are total net retail flows of £7.3 billion, into a diversified range of funds including 10 retail funds that attracted net flows of at least £100 million each during 2013.

M&G funds under management

2013: Total - £244bn, of which Internal £118bn, Institutional £59bn, Retail £67bn; compared to previous 4 years

Open all


Our investment edge is our people. We employ more than 1,700 people operating from offices across Europe, Asia and in Southern Africa. We take pride in attracting, developing and retaining people of the highest calibre. In return, they are committed to working with us to deliver high performance in serving the long-term needs of our customers. Our investment teams are primarily based in our headquarters in London, where they benefit from the provision of high-quality support staff and investment infrastructure: from analysts and dealers to operations, risk and compliance. Reflecting the need for local expertise in real estate, we have specialist real estate teams in Paris, Frankfurt, Luxembourg, Singapore, Seoul and Tokyo in addition to London.

Meeting customers’ needs

A committed focus on long-term investment returns means that the interests of M&G and its customers are always aligned, whether clients are individual savers, institutional investors or the funds of Prudential’s insurance operations.

M&G has a strong investment brand, built over decades and based on a reputation for honesty, innovation and a commitment to building long-term wealth for our investors.

Investment expertise

M&G’s investment expertise spans all the principal asset classes – equities, fixed income and property – so that we can always offer investment solutions to our clients as market conditions and investor sentiment change.

Equities: our fund managers have the freedom to develop their own investment approaches. Their main strength lies in stock selection, focusing on fundamental company analysis. M&G’s size and standing enables our fund managers to develop an effective dialogue with the management teams of the companies in which they invest.

Fixed income: M&G is one of Europe’s largest fixed income investors. Our fund managers benefit from one of the region’s largest and most experienced in-house credit research teams, whose knowledge covers the full range of fixed income investment, from the management of sovereign debt and corporate bond portfolios, through to leveraged finance, real estate finance, direct lending and infrastructure.

Real estate: M&G Real Estate is a leading global property investor and manager covering all major real estate sectors. We actively manage our assets, drawing on our long heritage of expertise and knowledge and our extensive network of contacts. This approach enables the business to identify and capitalise on attractive investment opportunities. During 2013 M&G returned to the UK residential property market for the first time in 30 years with a £105 million investment in London housing.

A history of innovation

Since launching the UK’s first open-ended fund in 1931, we have brought a succession of new investment strategies to the retail and institutional markets. In combination with this tradition of innovative investment thinking, M&G has a proven ability to convert ideas into significant fund flows. It is these two qualities in combination that make M&G distinctive.

Recent investment success stories include the M&G Optimal Income Fund, one of the first truly global flexible bond funds for retail investors. The fund has attracted £17.3 billion of assets since its launch in 2006. Similarly, the M&G Global Dividend Fund, which invests in companies around the world that consistently grow their dividends, has reached £8.9 billion in five years.

Recent innovations for institutional third-party clients have focused on investment strategies to manage long-term inflation-linked liabilities. M&G successfully runs the M&G Secured Property Income Fund, a portfolio of long-lease properties with in-built inflation-related rental streams, which draws upon our combined real estate and fixed income investment experience. This Fund, which has total investor commitments of over £2.1 billion, has delivered an annualised return of 7.4 per cent above RPI over the five years to 31 December 2013. It had a record year in 2013 in terms of transaction activity, completing on nine transactions with a total end value of £625 million. Of this amount, £235 million were developments, thus demonstrating the Fund’s ability to take on sizeable development financings – an area in which the banks have reduced their activities. This brings the Fund’s development transaction total to £370 million over the life of the fund to date.


M&G has pursued business diversification across:

  • Asset class: expertise across equities, fixed income, real estate and mixed-asset strategies;
  • Client type: retail customers and institutional clients including pension funds, sovereign wealth funds, and Prudential’s own long-term insurance funds;
  • Investment strategy: Over 60 pooled retail funds covering domestic, global and emerging market strategies, 13 of which have funds under management of over £1 billion. Institutional clients benefit from a wide range of pooled and/or segregated fixed income, equity and real estate strategies; and
  • Country: M&G is an international asset manager with operations in 18 countries. Retail products are distributed in 20 jurisdictions, with over a third of retail funds under management sourced from outside the UK.


  1. Excludes Prudential Capital.
  2. Source: Lipper FMI Fund File as at 31 December 2013.
  3. Source: Investment Management Association as at 31 December 2013.
Return to top

Reporting tools

Save pages of the report
to download, print or email

View your pages


Your comments and ideas
help us to shape future reports
to suit your needs

Tell us your views