M&G shares have been sold – some 15% of the company for £850m, valuing the firm at just 1.5% of FUM.
The company reportedly manage £350bn in total.
So 15% of the company is £52bn, and they bought that for 1.5%.
It really does represent a new low in financial services fund management.
The irony is that they were bought by Pru at the height of the market, nearly a generation ago.
Pru paid 10% of FUM in 1999 for the firm.
The answer can only lie in the domination of the markets by niche hedge funds that actively interfere with perceived mispricing.
The vast bulk following index strategies – so it is easier for hedgies to get ahead of the automation.
And that leaves M&G stuck between the hedgies and the indexers.
There is nowhere for them to go.
You look at the pivot by ABRDN / Standard Life out of retail and into the FUM game, and cringe at just how bad a decision that is proving to be, at least as of today.
So what lies behind this transformation?
It is of course the rise of computer power.
Index funds rely on computing and automation to power the liquidity and huge fund collectives.
Automation is the key, and it is coming to get your role.
The survivors and thrivers are those to adapt the fastest.
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