The chief executive of M&G Investments on the firm’s growth plans, private markets and the case for Europe

At a time when growth has been eluding many asset managers, M&G Investments has been steadily growing its business over the past year.

In November the London-based asset manager reported third quarter net inflows of £1.8bn, reversing the net outflows of £1.9bn reported for the whole of 2024. The latest inflows take the firm to £3.9bn of net inflows for the year to date.

“I’m very pleased,” says Joseph Pinto, who became CEO of M&G Investments in March 2023 after three years at Natixis Investment Managers in Paris.

The 56-year old father of three says that the financial performance of the London-based savings and investment group reflects “successful execution” of a strategy set out before he arrived and that has sharpened since: expanding internationally, doubling down on high-conviction active management and building on longstanding strengths in private markets.

A glance at the client mix shows the shift. “We now have 58% of our assets under management from international clients, up from 37% five years ago,” he says.

That has been driven by stronger brand recognition “across roughly 20 European markets, the biggest Asian markets and selectively in North America,” supported by selective bolt-on acquisitions and – more importantly, Pinto stresses – wins across public and private strategies. “It’s mostly more clients trusting M&G across various asset classes.”

Private markets sit at the centre of Pinto’s plan. M&G today manages about £77bn in private assets (roughly a fifth of the group’s assets under management and administration of £365bn, as of 30 September) backed by what he calls a distinctive model: the symbiosis between M&G’s asset management arm and its life insurance business.

“Patient capital from life insurance clients helps us build propositions for third-party investors,” he says. Two pillars dominate: real estate and private credit, which together account for about 70% of private AUM.

Real estate is now global – “strong in the UK and across Europe, and increasingly relevant in Asia” – while private credit is anchored in Europe and broadening out, from leveraged loans and direct lending to structured credit, asset-backed finance and specialty finance.

M&G is not a big direct private equity house, by design. “We want to operate where we have a right to win,” Pinto says, noting that buyouts felt “crowded” and less aligned with the group’s insurance heritage.

Instead, M&G runs fund-of-funds in private equity, a growth-equity strategy under the Catalyst banner, infrastructure equity and a Zurich-based emerging-markets platform focused on financial inclusion, climate, and food and agriculture across both private equity and private credit.

The Frenchman is unapologetic about the tilt. For long-term allocators, he argues, private assets offer genuine diversification and an illiquidity premium that can help match long-dated liabilities.

“Public and private universes are roughly similar in size. Investors want to benefit from both,” Pinto says.

The message appears to be resonating with large institutions: M&G has secured a multiyear commitment from Dai-Ichi Life, a major Japanese life insurer that took a 15% stake in M&G in May.

The partnership will see and deploy billions invested into its “best strategies” across public and private markets. “They looked at where we operate and liked the distinctiveness,” Pinto says.

Alongside the £77bn already managed in private assets, M&G has raised roughly £6.5bn of committed capital “to be deployed” which should support growth as portfolio managers pace investment “at the right price and into the right assets.”

Active by conviction

If private markets are one leg of the strategy, high-conviction active management in public markets is the other. “We’re a high-active asset manager,” Pinto says. He credits strong investment performance for recent net inflows, particularly in public strategies, and cites an external broker’s composite index that has repeatedly ranked M&G’s performance at or near the top of its European peer group over the past three years.

“It’s an advance indicator of where flows should go,” he says. The model behind those numbers is straightforward: invest heavily in research, maintain deep teams with succession benches and remain ruthless about where the firm competes.

There are no passive products at M&G – “no index funds, no passive mandates, no passive ETFs”  – but that doesn’t mean avoiding the ETF market altogether.

“We’re about to launch our first active ETFs,” Pinto reveals, with a first wave slated for the fourth quarter. The ETFs will sit across equities and fixed income, using a third-party platform to provide the wrapper. “We chose spaces complementary to our existing high-active products,” he says, declining to name strategies until regulatory approvals are complete.

Building beyond Britain

Internationalisation has not been an empty marketing slogan, Pinto insists, but an organisational shift. M&G has added sales and client-service teams in Japan, South Korea, Hong Kong, Taiwan and Singapore – with Asia now home to roughly 70 investment professionals – and is considering “more boots on the ground in Australia” next year.

In North America, distribution teams have been supplemented by investment capability: a US credit team hired five years ago now manages more than $12bn on behalf of the life business, with Ucits funds launched for third-party clients. A parallel Asian credit team has followed. Europe, meanwhile, has seen broad-based hiring across institutional and wholesale channels.

The firm is also leaning into semi-liquid structures to broaden access to private markets. On the Continent, M&G has built a Luxembourg platform of evergreen vehicles (FCPs and SICAVs) often seeded by the life business so third-party clients can co-invest “alongside a very large, long-term investor.”

In Europe, its private-credit ELTIF has raised close to €1bn, Pinto says, supported by an extensive education programme for distributors.

In the UK, M&G plans to bring the same concept to market via an LTAF, with private credit the first focus and the potential for additional vehicles depending on demand from DC pension platforms and other asset owners. “We picked a space where clients can understand the asset class and liquidity conditions,” he says.

Rebalancing toward Europe

On markets, Pinto senses a gentle rotation that favours M&G’s footprint. After last year’s stellar US equity performance, many global investors found themselves overweight the US relative to benchmarks and have been trimming back.

“I wouldn’t call it a European renaissance, but it’s a logical rebalancing,” he says. The beneficiaries inside M&G have included a long-standing European value equity strategy –  “the portfolio manager has been with M&G for more than 22 years” – as well as Asia equities, Asia credit and European credit.

Sustainability remains another durable demand driver, particularly in Europe. “Energy independence after Russia’s invasion of Ukraine requires investment in transition,” Pinto says, pointing to its Catalyst infrastructure and private credit strategies as areas aligned with that theme.

The unknowns, as ever, are geopolitical and macro: the path of US policy, inflation’s persistence and the implications for rates and government debt. Here, too, Pinto sees a role for private assets: “Most private asset classes are a great hedge against inflation.”

Like many of its peers, M&G has pursued efficiencies, but Pinto frames the exercise as reallocation rather than retrenchment.

“In an inflationary world, we’ve held the cost base roughly flat ex-acquisitions since 2022,” he says. Headcount in asset management is “about the same” as two or three years ago, but with resources reweighted toward priority areas in Europe, Asia and the US, and away from strategies that were expensive, internal-only or insufficiently differentiated.

“It’s as important to define where you don’t want to be as where you do,” he says. The group targets a lower cost-to-income ratio over time, driven as much by asset growth as by cost discipline.

Even the group’s office footprint tells a story of adaptation. Post-pandemic, M&G has embraced hybrid work (around three days in the office per week on average) and sublet several floors of its London headquarters which it moved into in 2019.

The firm is also proud, Pinto adds, of its 40 Leadenhall development, a 34-storey City of London tower which is now overwhelmingly let. “It showcases long-term capital deployed well,” he says.

Pinto is bullish on the UK capital. “Despite Brexit, London remains by far Europe’s financial hub,” he says

“Active is not dead. The strong active players are here to stay,” he says. “We’ve invested in talent, in research and in the strategies where we have a right to win,” he says. “That’s what’s driving flows and that’s how we intend to keep growing.

source: Fund Europe