Schroders’ net inflows drop sharply, as weak pound lifts AUM

Added 3rd November 2016

Sterling weakness lifted Schroders’ assets under management by close to 30% during the first nine months of the year in the face of a 67% drop in net inflows.

Schroders’ net inflows drop sharply, as weak pound lifts AUM

The FTSE 100 asset manager confirmed that the depreciation of the pound had bolstered its total AUM by £38.6bn ($47.4bn, €42.7bn) since 1 January 2016. The group’s overall assets climbed to £375bn over the period.

While the group attracted £2.7bn in net new business, this figure was 67% lower than the £8.3bn in net inflows recorded the year before.

The £3.2bn in positive flows garnered by its asset management arm was largely offset by the performance of the retail division, which suffered £2.2bn in outflows to 30 September.

Post-Brexit redeption rise

Schroders is far from the only fund manager to report redemptions from its retail business post-Brexit. Last week, Henderson Group revealed the EU referendum had contributed to a £1bn net outflow.

The group’s wealth management division similarly struggled to hold onto clients, according to its trading update, losing £500m compared with last year’s positive flows of £200m. Net operating revenue improved marginally, however, and was up 3% at £162.6m.  

Pre-tax profit also slipped slightly from £438.9m in 2015 to £436.2m.

North American strides

Despite the relative setbacks post-Brexit, group chief executive Peter Harrison said Schroders had “continued to deliver solid results in the first nine months of the year” and had made particularly impressive strides in North America.

The asset manager’s share price was not negatively impacted by the significant decrease in net inflows and was trading upward by 1.83% to 2837p Thursday morning.

The Royal Bank of Canada was also not put off by Schroders’ performance, remarking that its “flows have proven resilient post the UK referendum, investment performance has been strong (aided by the weak sterling) and the results are a beat to both our expectations and consensus.” RBC added it was “further encouraged by a rebound in net flows in Schroders' intermediary business.”

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