Instead of just getting bigger, fund managers should concentrate on getting better Jupiter Asset Management has detected a disturbance in the Force. With outflows mounting, the fund manager has joined rivals in pressing the panic button. Its solution, as is often the case in the asset management industry, is consolidation. Hence the takeover of smaller competitor Merian Global Investors. So much for Jupiter being “a totally different organisation”, as new boss Andrew Formics said in an interview last summer. The Australian tried hard to play down the likelihood of a repeat of his dealmaking antics at his new shop, but old habits die hard. Formica is a deal junkie. At Henderson Global Investors, he oversaw the takeovers of struggling opponents New Star and Gartmore, and then a $6bn blockbuster transatlantic merger with Janus in 2017. At first glance, a tie-up of Jupiter and Merian looks like a winner. It creates the second-biggest manager of retail funds in the UK, with combined assets under management of just over £65bn. Shares in Jupiter spiked as much as 8pc after talks were revealed, but investors should take another look at how the Henderson-Janus mash-up has fared before getting too excited. The asset manager has suffered a spate of client withdrawals since its formation. Outflows have surpassed $55bn and the shares are down 17.5pc. The merger also triggered a bitter power struggle at the top with Formica losing out to co-chief Dick Weil. Still, this is an industry with huge pressure and seriously short of ideas. The rise of cheap tracker funds and exchange-traded funds has slashed fees, and consolidation is seen as the only, or at least, the easiest answer. Mergers provide scale and diversification, and by piling assets onto the same platform, an opportunity to cut costs. Jupiter has suffered seven straight quarters of outflows, and its European Growth fund has been hit particularly hard after the departure of star manager Alex Darwall. Merian meanwhile suffered £6bn of outflows from its Global Equity Absolute Return fund last year, prompting its private equity paymasters at TA Associates to seek a buyer. Deals, however, rarely prove to be the quick fix management is desperately searching for as shareholders in Standard Life and Aberdeen have discovered since their £11bn all-share marriage three years ago. Despite hundreds of millions in cost savings, billions of investor money has walked out of the door every quarter and the share price has tumbled by a third. None of this should really come as a surprise. There is a stack of research showing that most acquisitions destroy value instead of creating it. Instead of just getting bigger, fund managers should concentrate on getting better. But, with a £20m payday for Merian’s star fund managers riding on Jupiter’s takeover, perhaps that would be too much like hard work.