Why the Pendal (ASX:PDL) share price is sinking 9% today

Here’s why this fund manager’s shares are tumbling…

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The Pendal Group Ltd (ASX: PDL) share price is on course to record a sizeable decline on Friday.

In early trade, the fund manager’s shares are down 9% to $7.05.

Why is the Pendal share price sinking?

Investors have been selling down the Pendal share price on Friday following the release of its latest funds under management (FUM) update.

As you might have guessed from the share price weakness, Pendal’s FUM update was a touch disappointing.

At the end of September, the company had total FUM of $139.2 billion. While this was an increase of 30.5% over the $106.7 billion FUM it reported at the end of June, this increase was driven by favourable foreign exchange and market movements and the acquisition of Thompson, Siegel & Walmsley.

Pendal actually reported net fund outflows of $2.3 billion during the three months.

Management commentary

Pendal’s CEO, Nick Good, commented: “The acquisition of Thompson, Siegel & Walmsley LLC (TSW), delivered a step-change in FUM from $106.7 billion to $139.2 billion. For shareholders this is proving to be a value accretive acquisition.”

Mr Good also explained why Pendal experienced its net fund outflows during the quarter.

”There was significant volatility in client sentiment leading to re-balancing of portfolios and profit taking, giving rise to outflows in a range of channels and strategies,” he said.

Nevertheless, the CEO appears confident in the direction the company and its investments are heading.

He concluded: “At Pendal we are anchored by our high-conviction investment philosophy, which means we invest through the cycles to deliver superior long-term value and performance for our clients. The continued diversification of our business supports growth in FUM and shareholder returns.”

Pendal will be releasing its full year results for FY 2021 next month on 5 November.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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