F&C Asset Management plc : AUM Update

30 January 2013

F&C Asset Management plc ("F&C" or "the Group") is today updating the market on its Assets Under Management ("AUM") at 31 December 2012 and business flows for the fourth quarter of 2012.  Except where otherwise specified the data in this statement covers the three and twelve-month periods to 31 December 2012.

Highlights

·      Group AUM of £95.2 billion at 31 December 2012 (30 September 2012: £96.8 billion)

·      Consumer and Institutional AUM of £36.8 billion (30 September 2012: £36.7 billion)

·      Gross Third-Party Institutional inflows of £0.8 billion in the quarter, taking the total for the year to £2.9 billion, or12.7% annualised rate

·      Consumer and Institutional investment performance of £1.0 billion, or 2.8%, in the quarter

·      Institutional net pipeline of won but unfunded mandates, less notified withdrawals, of £0.8 billion (30 September 2012: £1.4 billion, 31 December 2011: £nil)

·      Pursuant to Friends Life's previously stated intention of insourcing its fixed income assets, Strategic Partner outflows included £2.4 billion withdrawals by Friends Life; insourcing of a further £6.2 billion of fixed income assets expected by mid-year, leaving £2.4 billion remaining

Richard Wilson, Chief Executive, commented:

"Performance in the quarter was good in most asset categories and revenue yields on inflows continue to exceed those on outflows.  We look forward to continuing progress in executing our Third-Party Institutional and Consumer growth strategies."

Assets under Management

Our Consumer and Institutional business ended the year with AUM of £36.8 billion (30 September 2012: £36.7 billion).

Gross inflows into our Third-Party Institutional business were £0.8 billion in the quarter and £2.9 billion for the year as a whole, representing a 12.7% annualised rate for the quarter and the year.  The revenue yield on Third-Party Institutional assets was approximately 32 bps for the quarter.

Gross outflows from our Third-Party Institutional business of £1.7 billion for the quarter were primarily attributable to cash management and government bond mandates of £1.3 billion with an associated revenue yield of approximately 3bps.  The majority of the remaining outflows resulted from £0.2 billion of property asset realisations prior to year end.

Our Consumer business experienced positive net flows of £30 million for the quarter.  Retail net flows in the quarter were positive £19 million and Investment Trusts also reported positive net flows of £11 million for the quarter. The Board of Directors of the Hedge+ Fund, a closed end fund of hedge funds categorised within our investment trust assets and managed by the Thames River Multi-alternative division, has announced it is conducting a managed run-down process and returning assets to shareholders.  At 31 December 2012, our AUM included approximately £56 million of assets in respect of this fund.

Continuing the trend reported earlier in the year, our Wholesale business experienced material net outflows of £0.3 billion during the quarter with the most significant outflows from the Thames River Global Credit funds following a period of weak investment performance.  The adjusted net management fee revenue yield to F&C on the funds withdrawn was approximately 47 bps.  At 31 December 2012 our Wholesale funds totalled £1.3 billion, or approximately 1.4% of Group AUM. 

Performance in the Consumer and Institutional business generated AUM growth of £1.0 billion, or 2.8% (11.1% annualised) in the quarter, reflecting robust performance in all business areas other than Wholesale, where returns for the business as a whole were slightly positive.  AUM also increased by £0.3 billion in the quarter as a result of the Euro strengthening against Sterling, reversing the trend of the previous six quarters in which the contributions from FX were negative.

Our Strategic Partner AUM declined from £60.0 billion at 30 September 2012 to £58.5 billion at 31 December 2012 as a result of favourable investment performance partially offsetting client withdrawals.  The largest contribution to outflows in the quarter was the previously announced withdrawal of £2.4 billion of fixed income assets managed for Friends Life.  We anticipate that Friends Life will withdraw a further £6.2 billion of fixed income assets during the year.  The impact of this further withdrawal on our 2013 revenues will be moderated as the assets are expected to be withdrawn around mid-year.  Friends Life has previously announced its intention to manage fixed income assets internally and after the withdrawals set out above we will manage approximately £2.4 billion of remaining fixed income assets on behalf of Friends Life.

- ENDS -

For further information please contact:

F&C Asset Management

David Logan - Chief Financial Officer                                           +44 (0) 20 7011 4272

FTI Consulting

Billy Clegg - Managing Director                                                   +44 (0) 20 7269 7157

Forward-looking statements

This AUM and business flows announcement may contain "forward-looking statements" with respect to certain of F&C Asset Management plc's (FCAM) plans and its current goals and expectations relating to its future financial condition, performance, results, strategy and objectives. Statements containing the words "believes", "intends", "expects", "plans", "seeks" and "anticipates", and words of similar meaning, are forward-looking.  By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond FCAM's control including among other things, UK domestic and global economic and business conditions, market related risks such as fluctuations in interest rates and exchange rates, and the performance of financial markets generally; the policies and actions of regulatory authorities, the impact of competition, inflation and deflation; the timing, impact and other uncertainties of future acquisitions or combinations within relevant industries; and the impact of changes in capital, solvency or accounting standards, and tax and other legislation and regulations in the jurisdictions in which FCAM and its affiliates operate.  As a result, FCAM's actual future financial condition, performance and results may differ materially from the plans, goals, and expectations set forth in FCAM's forward-looking statements.  FCAM undertakes no obligation to update the forward-looking statements contained in this statement or any other forward-looking statements it may make.  Nothing in this publication should be considered as a profit forecast.

Assets Under Management

The tables below set forth Assets Under Management ("AUM") at 31 December 2012 and fund flows for the three and twelve months to 31 December 2012.

1.          Summary of AUM and fund flows

a)         Quarter to 31 December 2012

b)         Twelve months to 31 December 2012

2.          AUM by client category

3.          AUM by asset class

4.          Fund flows

a)         Fund flows for the quarter to 31 December 2012

b)         Fund flows for the twelve months to 31 December 2012

5.          Thames River AUM and fund flows

a)         Fund flows for the quarter to 31 December 2012

b)         Fund flows for the twelve months to 31 December 2012

Notes to AUM tables

(1)During Q4 the Group restructured certain of its pooled funds.  This led to asset transfers between funds categorised as Wholesale, Retail and Third Party Institutional and has been presented as if the transfer took place with effect from 1 January 2012.

(2)Alternative Investments includes non-UCITs Alternative Investment Funds, Funds of Alternative Investments Funds, Private Equity Funds and fund-based products with active derivative overlay strategies