Schroders hit by profit fall but assets up
FUND management giant Schroders yesterday reported a 73.2 per cent pre-tax profit fall in the first half of the year, although the firm also said investments had put £3.9bn into its funds in the period.
The group said pre-tax profits after exceptional items were £36.3m, sharply lower than the £135.7m profits last year, due to the recent sustained falls in its all-important level of assets under management.
But, the asset levels rose rose from £110.2bn at the end of December to £113.3bn at the end of June, after a burst of new client investment in its funds.
Chief executive Michael Dobson said inflows of client capital were strong on the bond-fund side. This was because consumers were making virtually nothing from their bank deposit accounts in the period, due to the hisotrically low rates of interest.
As markets recover over the longer term, investors will “go up the risk ladder” moving more money into equities, he added.
Dobson said he “would not be at all surprised” to see some consolidation for stock markets after the strong gains of the last few months, but added he doesn’t expect markets to return to their March lows.
The firm said 80 per cent of its funds performed better than their benchmarks in the last year, with 77 per cent now registering outperformance over the last three years.
Cazenove analyst Rae Maile said the results were better than forecast, adding profit performance was aided by “a materially stronger-than-expected” set of client inflows in the second quarter in particular.
Shares of the firm rose almost four per cent on the results to just over 1,000p, compared with a low over the last year of 658p.