ii view: big dividend payer M&G details solid trading

Third-quarter trading to 30 September

Assets Under Management and Administration up 2.8% from Q2 to £365 billion

Net inflows for open businesses of £1.8 billion

Chief executive Andrea Rossi said:

“Despite a volatile macroeconomic environment, we are seeing growing momentum across M&G, as we continue to execute on our strategy and deliver strong long-term value to both clients and shareholders."

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 ii round-up:

Financial services firm M&G Ordinary Shares (LSE:MNG) today detailed net inflows that beat City forecasts, aided by management’s drive to increase diversification.

Demand for European equities helped net inflows of £1.5 billion at its asset management business, with an earlier year deal with Japan’s Dai-ichi Life expected to support flows going forward. Total assets under management, pushed by market increases, climbed to £365 billion from the prior quarter’s £355 billion. Analysts had expected net inflows of £1.3 billion.

Shares in the FTSE 100 company rose 1.5% to a record high in early UK trading, having come into this latest news up by just over a third so far in 2025. Both rival Schroders (LSE:SDR) and the  FTSE 100 are up by nearer a fifth year-to-date. 

M&G today manages money for around 4.5 million retail clients and more than 900 institutional clients. Previously separated out of Prudential, flows at the ongoing life business and its core with-profits PruFund rose £0.2 billion during the quarter compared to withdrawals of £0.6 billion during the first half. 

Overall net inflows during the quarter, including the life business, of £1.8 billion leave total net inflows for the nine-month period to late September at £3.9 billion. 

Within the Life division, new business volumes of £0.3 billion for Bulk Purchase Annuities (BPA) improved from £0.2 billion during the first half. M&G plans to launch a With-Profits BPA early next year. 

Broker Morgan Stanley reiterated its ‘overweight’ stance on the shares post the update. Full-year 2025 results are likely to be announced mid-to-late March. 

ii view:

Tracing its roots back more than 170 years, M&G today employs around 6,000 people across 39 offices globally. Headquartered in the City of London, group competitors include BlackRock, Vanguard, Man Group (LSE:EMG), Jupiter Fund Management (LSE:JUP) and Ashmore Group (LSE:ASHM).

For investors, intense competition across the asset management industry, including many providers of low-cost index tracking funds, has placed downward pressure on fees. Currency moves can impact profit performance. Competitors such as Schroders are not standing still, launching lower cost active exchange-traded funds (ETFs), while the uncertain economic outlook including likely tax rises at the UK Budget could see consumers reducing the amount they save.  

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To the upside, a focus on international clients has seen asset management mandates from overseas increasing over the last five years. A relatively new partnership with Japan’s Dai-ichi Life is expected to generate at least $6 billion of new business flows into M&G funds over the next five years. The group’s with-profits PruFund is a £68 billion franchise, while management continues to pursue cost saving opportunities across the company.  

In all, and despite ongoing risks, a forecast dividend yield of over 7% is likely to keep fans of this major UK financial services provider onside. 

Positives: 

• Expanding product and geographical client base
• Targeting cost cuts

Negatives:

• Uncertain economic and geopolitical outlook
• Intense industry competition

The average rating of stock market analysts:

Buy