The Pendal Group Ltd (ASX: PDL) share price is having a difficult finish to the week.
In early afternoon trade, the fund manager's shares are down almost 10% to a multi-year low of $3.69.
Why is the Pendal share price being sold off?
Investors have been selling down the Pendal share price today after the company released a disappointing funds under management (FUM) update.
According to the release, total FUM fell 11.1% during the third quarter of FY 2022 from $124.9 billion to $111 billion.
The weakness in its FUM was across the board, with its Australian, EUKA (Europe, UK, and Asia), and US funds all posting quarterly fund outflows.
Management advised that in the US there were outflows in US Pooled Funds, primarily in the International Select strategy, as clients reduced their exposure to growth-oriented international equities.
Whereas in the EUKA, flow pressure persisted in European and UK equities, and in Australia institutional outflows were primarily in fixed income.
Performance fees fall
In addition, the company revealed that for the 12 months to 30 June, its realised performance fees have generated $5.4 million in revenue.
This is down by two-thirds from realised performance fees of $16.4 million for the same period a year earlier.
Management commentary
Pendal's CEO, Nick Good, revealed that the quarter was challenging. He said:
During the quarter there have been sustained market challenges. Global equity market volatility increased dramatically with rising inflation worries, ongoing concerns over geopolitical tensions, and fears of economic recession around the world due to aggressive tightening measures by major central banks.
This has resulted in client caution, which has driven fund redemptions, however flow trends improved in June and there was continued investment from St. James's Place into the Global Opportunities strategy during the period. An additional $1.3 billion is expected to be funded by St. James's Place in the September quarter.
As a result of current market conditions, we remain prudent and flexible in managing costs, focusing on building and strengthening our strategic growth areas. These include the development and expansion of our global distribution capability, the streamlining of the group's global operating platform and adapting our product offerings to ensure ongoing and future relevance to our clients.
