Schroders to bear down on costs in major strategic overhaul
Storied investment giant Schroders has unveiled a new three-year strategy alongside its full year results in an attempt to attract new business and and reign in spiralling costs.
The FTSE 100 investor has promised to deliver £150m of annual net cost savings, of which it claims to have already delivered £20m in the first three months of 2025.
Alongside the efficiencies, new boss Richard Oldfield vowed to bring to heel the revenue Schroders derives from active investment in public markets, which have been suffering years of outflows amid the growing popularity of passive investing and the ascent of private markets.
Shares jumped as much as 6.5 per cent in early trading.
It will also generate £20bn of net new business into its own private markets outfit Schroders Capital, thanks to a renewed focus on private equity investing into small and medium-sized enterprises (SMEs) and renewable energy infrastructure.
It will reduce its annual cost:income ratio – a widely-used efficiency metric in fund management – from 75 per cent to below 70 per cent.
The strategic overhaul is the first major intervention by Oldfield, who took over helm at Schroders in September last year, having previously been its chief financial officer.
The most pressing task in his in-tray has been to reset the course of the investment behemoth which – like many UK shops – has been struggling to stem outflows and keep its costs down.
“Today we are setting out a clear plan to return to profitable growth, with ambitions new three-year targets,” said Oldfield.
“We will re-focus on considerable areas of strength and have a firm grip on our challenges. Our transformation plan is underway, and will benefit not just our shareholders but also benefit our people and – most importantly – our clients.”
The root and branch overhaul was announced alongside the manager’s full-year results, which saw the firm’s profit slump three per cent due to higher operating expenses and lower performance fees.
Assets under management (AUM) in the year ended 31 December nudged up four per cent to £778.8bn, while net operating revenue fell two per cent.
The board maintained Schroders’ dividend at its current level of 15 pence a share.
Six months ago, shares in the FTSE 100 giant plummeted over 14 per cent in a session, after it revealed a painful outflow numbers in its half-year results.