Schroders assets fall in 2015

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Schroders assets fall in 2015

Schroders has seen its assets fall by a huge £5.2bn in first nine months of the year – the equivalent of the entire GDP of countries such as Kosovo or Guinea.

The global investment house reported that assets under management had fallen from £300.9bn to £294.8bn until 30 September, as a result of negative investment returns over a year marked by a slowdown in China.

In its third quarter interim management statement published on 5 November, the asset manager recorded a net inflow of £8.1bn, comprising £3.5bn from its institutional and £4.6bn from its intermediary business. However, negative investment returns totaling £13.1bn, £7.3bn in institutional and £5.8bn in intermediary, meant that assets under management fell by £5bn in that period.

The biggest loss for the asset management division was in Q3, which saw assets fall from £277.9bn, as at 30 June, to £263.9bn.

The wealth management division recorded net revenue of £157m for the period, down from £162.2m in 2014. But pre-tax profit was £47.7m – an increase from £33.6m in 2014.

That fall was in part attributed to a £14.6bn loss in its investments, in a quarter where the FTSE 100 fell by 7 per cent, and with fears about a Chinese economic slowdown.

Profit before tax was up 21 per cent, according to the statement, to £438.9m from £364.2m in 2014. On a year-on-year basis, though, total assets in the division increased by £18.2bn.

Chief executive Michael Dobson said: “In the first nine months of the year, profit before tax increased to £438.9m and we generated £8.3bn of net new business. These results reflect the resilience of our diversified business at a time of heightened market volatility.

On 6 November, analyst Shore Capital reissued their hold rating on shares of Schroders in a research note issued to investors, while fellow analyst groups Panmure Gordon and Liberum Capital also restated its hold rating.

Numis Securities also reaffirmed its buy rating on Schroders shares, believing that the company has positive prospects for growth.

Adviser view

Darius McDermott, managing director of Chelsea Financial Services, said: “The fall in assets under management is pretty much entirely due to falls in the markets and, while the number is big, in terms of percentage of Schroders assets, it is quite small. They have net inflows and, overall, the business seems in good shape.”