State funds withdraw €41.8bn from asset funds in 2015

Asset managers suffered record outflows from sovereign wealth funds in 2015 and have been warned to expect even greater redemptions this year as the oil price collapse drives governments to raid their state-owned investment vehicles.

State funds pulled at least $46.5 billion (€41.8 billion) from asset managers in 2015 – far greater than the sovereign outflows recorded at the height of the financial crisis – in a bid to prop up their economies, according to figures from data provider eVestment.

The outflows have dented profitability at many of the world’s largest investment companies, including BlackRock, Aberdeen Asset Management, State Street and Franklin Templeton.

The chief executive of a large European asset manager, who requested anonymity, said the scale of redemptions from SWFs has been “very hard” for the industry. “[State funds] have had a steep and very fast escape from the market. I am afraid it will continue,” he said.

Rating agency Moody’s predicted sovereign outflows would be at least 25 per cent higher this year due to the decline in the oil price from $130 a barrel in the middle of 2014 to $34 a barrel. – (Copyright The Financial Times Limited 2016)