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Pendal share price dips on falling FUM announcement

The Pendal Group Ltd (ASX: PDL) share price is down 1.31% in early trade and could fall lower after reporting lower funds under management (FUM) this morning.

What did Pendal announce this morning?

Pendal reported end of quarter FUM of $100.4 billion. This is down 1% for the quarter, following outflows of $2.3 billion, primarily in Pendal’s European and United Kingdom open-ended investment companies (OEICs) and its Westpac Banking Corp (ASX: WBC) book.

However, strong inflows of $0.5 billion into the group’s United States pooled funds should buoy investors’ spirits this morning.

What about Pendal’s ASX wealth management peers?

The news was worse for Perpetual Ltd (ASX: PPT) this morning, as its quarterly FUM fell 4.04% to $26.1 billion at the end of the period.

Perpetual’s $1.1 billion decrease came despite a $0.7 billion gain from the markets, with the company reporting $1.8 billion in net outflows in the quarter.

It’s been a tough quarter for the ASX wealth managers with even Magellan Financial Group Ltd (ASX: MFG) reported lower quarterly FUM.

Magellan’s September FUM edged lower to $92,072 million while Platinum Investment Management Ltd (ASX: PTM) climbed 0.87% to $24,612.68 million.

What does this mean for shareholders?

With further interest rate cuts also coming into effect in the last 3 months, I think these fund outflows are even more surprising.

A number of the Aussie wealth managers also reported gains from foreign exchange and the markets, meaning investors are heading for the door. It could be that investor confidence is faltering as the central banks become more dovish and recession concerns rise.

The Magellan share price is down 10% to $47.37  in the last month, but it is still double its start-of-year valuation.

It’s been a similar story for the other ASX wealth managers, with the Perpetual, Pendal and Platinum share prices all falling lower in the last month.

Foolish takeaway

We’ve seen from Pendal’s update this morning that the ASX wealth managers could struggle to post gains before the end of 2019.

The trend of declining FUM could be a cause for concern, especially given the general uptick in the market over the September quarter.

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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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