Jupiter Fund Management suffered £1bn ($1.29bn) in net outflows in Q3, as the firm was hit by investor exists following its acquisition of Merian Global.
Of the outflows from Merian branded products, £400m came from Merian’s “systematic strategy”. Despite the loss, positive market moves across the quarter equated to £800m, which worked to slightly offset the £1bn outflows.
The firm’s assets under management (AuM) increased by £16.5bn to £55.7bn, driven predominantly by the acquisition which introduced £16.6bn on 1 July 2020.
The acquisition of Merian, announced in February 2020, was set to leave Jupiter as the second-largest retail fund manager in the UK, with more than £65bn in AuM.
However, after the repeated battering of the market from COVID-19, outflows at Merian caused this figure to fall.
The takeover of Merian by Jupiter received support from 95.04% of shareholders and the operational integration of the two asset managers was achieved by 30 September 2020, lifting the AuM to £55.7bn – almost £10bn less than the original estimation.
As part of the deal, Jupiter agreed to pay-off the debts of Merian and absorb Merian’s investment team. The acquisition was the first major deal under new CEO Andrew Formica, who joined Jupiter in 2019.
Praising the “cultural alignment” of the two firms, Jupiter said: “The quality of the people at Merian was highly influential in our decision to buy the business and the team shared our commitment to active asset management, delivering superior performance and building deep relationships with clients.”
Merian was spun out from Old Mutual in 2018 in a management buyout, led by Richard Buxton and endorsed by TA Associates.
The recent losses only add fuel to fire for Jupiter after they, amongst many firms, faced a difficult first six months of 2020.
The UK fund management group, founded in 1985 as a specialist investment boutique, saw their profits halved between January and June, as the firm failed to secure any performance fees and clients continued to withdraw their assets.
In a statement in July, Formica said: “Despite market volatility, our investment teams have delivered strong investment outperformance reinforcing our commitment to high-conviction active management.”
The pandemic, and the subsequent market volatility, caused many investors to change their portfolios.