Mg Overview Performance

8/2/2019 Mg Overview Performance

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Michael McLintock, Will Nott, Simon Pilcher and Grant Speirs

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M&GA enda

M&G Retail Will Nott

M&G Fixed Income Simon Pilcher

M&G Group Financials Grant Speirs

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M&Gs strategic priorities

People Performance Sales & profits

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M&G Group overview

191bn FUM invested in equities, fixed income and property*

83bn external funds

Mana e lobal assets redominantl on behalf of UK andEuropean investors

-

122m (H1 2010)

4

*as at 30 September 2010


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M&G GroupDevolved business structure with centralised support

M&G Investments

Retail102m PBT

Equities PruPIM*PPM**

South AfricaIncome43m PBT

Shared services

*Prudential Property Investment Management

Risk, Compliance, Operations

5

**Prudential Portfolio Managers South Africa


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Our market-leading positionNet UK retail sales

2nd quarter 2007 2nd quarter 2008 4th quarter 2008 3rd quarter 2010

TOP TEN NET RETAIL SALES

Fourth Quarter 2008 (m)

M&G 1,003.9

Invesco Perpetual 765.2

TOP TEN NET RETAIL SALES

Second Quarter 2007 (m)

Invesco Perpetual 1,143.6

Schroder 779.4

TOP TEN NET RETAIL SALE

Second Quarter 2008 (m)

BlackRock 879.2

Invesco Perpetual 813.9

TOP TEN NET RETAIL SALE

Third Quarter 2010 (m)

M&G 1,282.5

BlackRock 1,032.3

upter .

SWIP 458.5

BNY Mellon 356.9

BlackRock 301.9

ew tar .

SWIP 547.0

Artemis 365.3

Jupiter 357.1

.

M&G 410.9

Jupiter 256.9

Mellon 240.5

an ar e nv .

BNY Mellon 567.2

First State 520.3

Invesco Perpetual 357.8.

Neptune 166.6

Schroder 130.2

First State 128.3

ac oc .

Standard Life 250.7

M&G 247.8

Investec 224.4

rs a e .

Halifax 156.8

Threadneedle 141.1

Martin Currie 133.0

c ro er .

SWIP 260.2

HSBC 250.5

AXA 245.4

8 consecutive quarters at number 1 for gross and net UK Retail sales

6Source: Pridham Report


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How have we achieved this position?Strength across key asset classes in the UK

907.81,000

Est. net sales year ending Sept 10 (m)

712.9

600

700

800

415.7 382.7

192.0 172.3 162.7 125.1 119.1200

300

400

500

.

0

100

M&G Recovery

Fund

SWIP UK

Enhanced Equity

BlackRock

Collective

SWIP Foundation

Growth

Prudential UK

Growth

L&G (N) Tracker

UK Tracker Trust

AXA Framlington

UK Select

BlackRock UK

Special Situations

JOHCM UK

Opportunities Fund

Newton Income

Fund

Number 1 money taker in UK equities

Investment Funds -

UK Equity Tracker

Opportunities Fund

Source: Lipper FMI - Lipper FundFile as at end-September 2010. Figures in GBP. M&G data sourced internally and based on UK retail sales only

8

(excluding internal flows).


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How have we achieved this position?Strength across key asset classes in the UK

443.7450

500Est. net sales year ending Sept 10 (m)

.

330.5294.4

251.3300

350400

208.3 207.1

160.2 148.4107.7

100

150

200

0

50

Newton Global

Higher Income

Aberdeen World

Equity

M&G Global Basics

Fund

St James's Place

Worldwide

M&G Global

Dividend Fund

Sarasin EquiSar

Global Thematic

Vanguard FT SE

Developed World

Schroder QEP

Global Active Value

Neptune Global

Equity Fund

Jupiter Merlin

Worldwide Portfolio

Opportunties Unit

Trust

ex-U.K. Equity Index

Fund

Number 1 money taker in global equities- -

9

. .(excluding internal flows).


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How have we achieved this position?Stren th across ke asset classes in the UK

1061.11007.71,100

1,200Est. net sales year ending Sept 10 (m)

783.1

700

800

900

1,000

390.9 380.8 371.3 344.6

281.8 267.1 266.6 243.5 229.1 226.7 223.4 215.8300

400

500

600

0

100

200

M&G Strategic

Corporate

M&G Optimal

Income Fund

L&G Dynamic

Bond

Henderson All

Stocks Credit

Santander

Sterling

Aviva

Investors

SWIP Sterling

Credit

L&G High

Income

IP Tactical

Bond Fund

Henderson

Strategic Bond

Fidelity

Strategic Bond

Standard Life

Select Income

Henderson

Long Dated

Fidelity

Moneybuild

Cazenove

Strategic Bond

Bond Corporate

Bond

Corporate

Bond

Advantage Credit Income

Number 1 money taker in Fixed Interest

- - *

Please note that LV= Short Dated Corporate Bond and LV= Medium and Long Dated Corporate Bond have been removed from the top selling fund listas the majority of the funds estimated net sales over the latest year are sourced from internal seed capital.

10

. . ,IMA Strategic Bond, IMA High Yield and IMA UK Gilts sectors. M&G data sourced internally and based on UK retail sales only (excluding internal flows).


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How have we achieved this position?Stren th across ke asset classes in the UK

755.3 722.7800

Est. net sales year ending Sept 10 (m)

500

600

223.0 219.4 214.3 188.2

109.4 107.9 97.9 88.9200

300

0

M&G Property SWIP Property Threadneedle

Ignis UK

L&G UK

Aviva Investors Schroder

Skandia

Clerical

Aviva Investors

Trust

SecuritiesFund

Property

Property

- -

Number 1 money taker in Property

11

. .(excluding internal flows).


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M&G Fixed Income

One of the largest fixed income investors in Europe

2006: 15% of top 40 UK pension funds

2009: 70% of top 40 UK pension funds

Dynamic and innovative investment approach

Pioneer new investment products and thinking

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How have we achieved this position?

Investment-led

Stable team with low turnover

Strong identity around culture and brand

Focus on organic growth

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M&G GroupReco nition for our investment leadin ro osition

Outstanding Investment

House (UK)

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Will Nott, CEO M&G Securities

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M&G Retail todayTransformation of the Retail business since 2000

M&G Retail net sales 2000 end Sept 2010 (bn)

7.3

6

7

8

5.1

4

5

ales

bn

1.7

2.42.1

1.82

3S

YTD 2010

0.10.2 0.3 0.2

.

0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

17

Source: M&G management information


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Transformation of M&G Retails asset baseStron rowth des ite a challen in external environment

40Growth of M&G Retail external FUM 2001 end Sept 2010 (bn)

30

FUM

bn

FUMSep -10

19.9bnFUM

20

tailexternal

10

M&GR

e

Jan-01

Jul-01

Jan-02

Jul-02

Jan-03

Jul-03

Jan-04

Jul-04

Jan-05

Jul-05

Jan-06

Jul-06

Jan-07

Jul-07

Jan-08

Jul-08

Jan-09

Jul-09

Jan-10

Jul-10

18

Source: M&G management information


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Improving the diversification of the businessB countr

FUM UK vs. International 2001 FUM UK vs. International 2005 FUM UK vs. International to 30/9/10

INTERNATIONAL

UK

INTERNATIONAL

UK UK

Total FUM11.5bn

Total FUM13.9bn

Total FUM35.9bn

Expansion into Europe diversifying the asset base

19

Source: M&G management information 2001 and 2005 data as at end Dec


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Improving the diversification of the businessB asset class

FUM by asset class 2001 FUM by asset class 2005

Property

FUM by asset class 2010 to 30/9/10

Multi Asset tMulti Asset Property

EquityBond EquityBond Equity

Bond

Total FUM11.5bn

Total FUM13.9bn

Total FUM35.9bn

Strong growth in fixed income assets

20

Source: M&G management information 2001 and 2005 data as at end Dec


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Looking aheadSi nificant ros ects for future rowth

M&G Retail Market shareSize of Fund market(FUM at end 2009)

UK 481bn 4.9%

Europe 4,118bn 0.1%

Opportunities for M&G Retail even without underlying market growth

21

Source: IMA, EFAMA


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Opportunities for asset managersEuro ean distribution is o ening u

raise standards and transparency across EuropeFinancial Secretary to the Treasury, Nov 2010

The issue of restoring trust will bedependent on creating moretrans arenc in the industr

Transparency and being open and honest with clients is a crucial

FT January 2010

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Simon Pilcher, CEO Fixed Income

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M&G Fixed IncomeUsin mana ement of internal assets as a latform for external rowth

Utilise skills develo edDeliver outstandin

InternalInstitutional

primarily for internalclient to build new

business streams and

investment returns toin-house capital through

investment in innovativevers y revenuesan attract ve areas o t e

capital markets

Active fund management, particularly credit

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M&G Fixed IncomeA broad and rowin client base

256 mandates

224 clients 22 have two mandates 6 have three mandates or more

Other clients from 26 countries - soverei n wealthfunds, insurance companies and local governments

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M&G Fixed IncomePerformance is a ke com onent of success

20

Institutional All Stocks Corporate Bond Fund

100

Rolling 3 year return and tracking error (to 30 June 2010)

JuneHigh

12

14

16

60

70

80

90

The roller coasterJune

2007

4

6

8

30

40

50

All the benefits of assive

Getting the risk/return blend right

Return

0

1 year 2 years 3 years 5 years

Fund Benc hmar k 0

10

20

0 10 20 30 40 50 60 70 80 90 100

management, but with active fees Low returns / high volatility

Low1.7% p.a. 1.7% p.a.2.0% p.a. 1.1% p.a.

100% of mandates ahead of benchmark in 3 years to Sept 2010

26

Sources: M&G, Mercer MPA, 30 June 2010


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M&G Fixed IncomeNet sales histor

7,000M&G Fixed Income net sales 2003 end Sept 2010 (bn)

5,000

6,000

3,000

4,000

1,000

2,000

0

2003 2004 2005 2006 2007 2008 2009 Ytd Q3 2009 Ytd Q3 2010

27

Sources: M&G, management information


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M&G Fixed IncomeGrowth in external revenues

120M&G Fixed Income revenues 2006 2009 m

100

venues

m

60

dI

ncomere

20

40

M&GF

ixe

0

2006 2007 2008 2009

Internal External

28



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M&G Fixed IncomeInnovation enhances re utation builds trust and hel s to row client base

Social Housing

Secured Pro ert Income Fund

29


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Secured Property Income FundWhat makes long lease ro erty so attractive?

Pension schemes need inflation-linked income

ong ate on s are natura nvestments ut:

index-linked Government bonds are very expensive conventional corporate bonds offer no direct inflation protection

Long lease property can offer: predictable cash flows long duration increasing inflation-linked income

security of owning the underlying real estate potential for capital gain

30


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Secured Property Income FundExam le of lon term bond-like income from ro ert

Let to Tesco Property Nominees Ltd with guarantee fromTesco Plc, rated A-

25 year lease with Tesco responsible for insuranceand all repairs

en ncreases annua y n e o w a oor o ancap of 5% for first 5 years and 0% to 5% thereafter

Tesco pay 20.50 per sq.ft but rents next door are40-42.00 er s .ft.

Tesco planning consent is open A1 with food but nextdoor is open A1 non food

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Grant Speirs, Group Finance Director

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M&G GroupConsistentl stron net flows exce tional in 2009 and 2010

16000M&G Group net sales 2003 end Sept 2010 (bn)

5,96210000

12000

14000

5,400

1,093

6000

8000

184 4161,345

3,104 2,720 2,095

7,517

5,700 5,117

1,1691,587

2,517

,2,238

1,312

0

2000

4000

2003 2004 2005 2006 2007 2008 2009 Ytd Q3 2009 Ytd Q3 2010

Retail Institutional

33Sources: M&G, management information


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M&G GroupRecord FUM levels

180,000

200,000

June 2007 September 2010

100,000

120,000

140,000

160,000 prev ous recor -

168bn

new record

191bn

40,000

60,000

80,000

0

,

Dec-0

3

Mar-0

4

Jun-0

4

Sep-0

4

Dec-0

4

Mar-05

Jun-0

5

Sep-05

Dec-05

Mar-0

6

Jun-0

6

Sep-06

Dec-0

6

Mar-07

Jun-0

7

Sep-07

Dec-07

Mar-0

8

Jun-0

8

Sep-0

8

Dec-0

8

Mar-0

9

Jun-0

9

Sep-0

9

Dec-0

9

Mar-1

0

Jun-1

0

Sep-1

0

Despite FTSE All Share level being 16% lower

Internal External Institutional External Retail

34



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M&G GroupFocus on rowin hi her mar in external FUM

FUM Average net fee rates

*External

ExternalInstitutional

n

Internal 108bn 11 bps

* Retail fees are gross annual management charges less rebates and commission payments

35



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M&G GroupStron rowth in rofits: out erformin markets

250

M&G Group profit history 2003 end Jun 2010 (m)

2843

12

200

175 185 16526

24

27

3

100

150

51

8096

134

75

1191350

0

2003 2004 2005 2006 2007 2008 2009 H1 2009 H1 2010

Underlying prof it Performance Related Fees/Carried Interest FTAS* UCP**

* Full year average FTAS index rebased to 2003 (closing price adjusted for dividends and splits)**

36

Sources: M&G, management information; Bloomberg


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Cost: Income ratioGood cost disci line throu h the c cles

100Cost to income ratio 2005 end June 2010 Excellent profit margins in

7570

6562

6563

60

70

80

M&G 36.7%

Schroders 25.0%

40

50

60 Aberdeen 22.7%

Henderson 27.6%

F&C 27.0%

10

20

30 Gartmore 24.5%

36% of current cost base0

2005 2006 2007 2008 2009 H1 2009 H1 2010

s var a e

Scaleable business operating platform generates operational efficiencies

37

Sources: M&G, management information, full year 2009 competitor data Morgan Stanley research


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2nd largest UK retail fund manager

40UK retail FUM bn Jan 2008

36.040

UK retail FUM bn end September 2010

26.5

19.425

30

35

21.6

25.6

25

30

35

13.211.8

10.3 10.07.7 6.9 6.8

11.7

10

15

.16.3

1 4.5 1 4.513.0 12.2

.

10

15

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Scott

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Scott

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St.J

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119% growth in FUM in under 3 yearsSource: IMA

7

Documents

Mg Overview Performance