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July 30, 2021

Schroders profit rises in H1; AuM surpasses £700bn on strong inflows

Schroders has reported a 33% rise in pre-tax profit in H1 2021, with assets under management (AuM) reaching a new record driven by inflows in mutual funds.

Group highlights

The British fund manager’s profit before tax and exceptional items in the first six months of 2021 stood at £407.5m, versus £306.2 a year ago.

Its AuM including joint ventures and associates totalled £700.4bn at the end of June 2021, up 6% from £663bn at the end of December 2020.

Excluding joint ventures and associates, AuM increased 5% over the period to reach £602.4bn.

Mutual Funds contributed net new business of £6.4bn, private asset products with Schroders Capital generated £2.9bn, while joint ventures and associates contributed £7.4bn.

Net operating revenues before exceptional items were £1.14bn in the quarter to June 2021, an increase of 18% from £971.6m in the prior year.

The firm attributed this rise to higher average AuM and demand for higher margin products including equity mutual funds and private assets.

Total operating costs before exceptional items were £837m in H1 2021, compared to £697.7m a year earlier.

Asset Management

Net income before exceptional items soared 23% year-on-year to £1.02bn, driven by joint ventures and associates that accounted for £37.9m compared to £19.8m a year ago.

Profit before tax and exceptional items grew to £334.5m from £260.3m.

In Mutual Funds, AuM as of 30 June 2021 was £114.8bn, driven by net inflows of £6.4bn as against net outflows of £4.8bn in H1 2020. There was strong demand for thematic equity products from Continental European clients and the Hartford Schroders fund range from US-based clients.

Private Assets & Alternatives closed the period at £48.2bn, driven by Schroders Capital. Alternatives recorded net outflows of £0.4bn.

Solutions ended the period with AuM of £193.6bn, compared to £192.3bn in FY 2020. It recorded net outflows of £0.4bn, compared to £42.7bn inflows in H1 2020.

The Institutional business reported net inflows of £1bn, versus net outflows of £0.7bn in H1 2020. This was driven by inflows from US-based clients into Fixed Income products, which outweighed outflows from APAC-based clients.

Asset management joint ventures and associates accounted for £37.9m of the group’s net income in the quarter to June 2021, compared with £19.8m in the prior year.

Wealth Management

Higher management fees led to a 15% rise in net income to £214.9m in H1 2021 from £187.6m in the prior year, while profit before tax and exceptional items increased 10% to £66.5m.

Of net new business of £1bn, £0.6bn were from Schroders Wealth clients while £0.3bn were through Benchmark Capital. Schroders Personal Wealth contributed net inflows of £0.1bn.

Total AuM in Wealth Management were £76.3bn at the end of June 2021, compared to £72bn in Fy 2020.

Schroders group CEO Peter Harrison said: “These results reflect the benefit of our organic growth initiatives, strong investment performance and our leadership position in sustainability.

“Assets under management reached a new high of £700 billion underpinned by demand for our higher margin equity focused mutual funds, especially from clients in the US and Continental Europe. Our investment teams delivered excellent investment performance for our clients again with 82% of assets outperforming over five years.”

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