Lloyds deal helps Schroders buck Covid crisis

Lloyds deal helps Schroders buck Covid crisis

The onboarding of some £30bn of Scottish Widows assets boosted Schroders’ net inflows to £38bn in the first half of the year, helping the giant fund house buck the coronavirus-induced market crashes and investor jitters.

Schroders’ half-year results, published to the stock exchange today (July 30), showed the firm saw £42.7bn of net new business pumped into its solutions strategies in the six months to June — £29.5bn of which stemmed from the onboarding of the Scottish Widows mandate.

In 2018, Lloyds and Schroders announced a strategic partnership which would see Schroders take over as manager of £80bn of Scottish Widows assets as the two companies joined forces to launch an advice business, Schroders Personal Wealth.

Today’s results show the remaining funds had been transferred to Schroders over the first half of 2020, boosting its overall net inflows to £38bn.

This in turn saw Schroders’ assets jump 5 per cent from £500bn to £526bn — a record high for the value manager.

Investors pulled cash from every other part of its asset management business, however. Its mutual funds saw £4.8bn of net outflows during the half year period while £1.1bn was withdrawn from private assets and institutional funds.

The wealth management arm saw £1.3bn of net inflows.

Schroders’ also suffered from some £10.2bn of negative market movements in its asset management business and £2.6bn of negative investment returns in its wealth management arm, chipping a total of £12.8bn from its Aum.

Today’s results showed its profit before tax and exceptional items slid 10 per cent to £306m while post-tax profits were 13 per cent below last year, at £223m.

Schroders’ net operating revenue also suffered, decreasing 2 per cent to £972m, while its net income declined 3 per cent to just over £1bn.

The fund house said this was primarily because it was funding a number of its solutions mandates, including the Scottish Widows’ assets, at lower revenue margins.

Despite this, the group declared an unchanged dividend of 35p per share which it said “reflected resilient performance”.

Peter Harrison, group chief executive, said: “We have delivered a robust performance in the first half of 2020, despite the extraordinary period of market volatility and continuing social and economic uncertainty.

“We have declared an unchanged interim dividend and continue to maintain a strong capital position, allowing us to invest in the future growth of the business. We are mindful of short-term risks, but believe that we will continue to generate value over the long term for our clients and our shareholders."

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