British fund manager Schroders annual results for 2019 showed a decrease in pre-tax profit with investors turning their back on equities.
However, assets under management (AuM) surged supported by a Scottish Widows mandate and the new Schroders Personal Wealth joint venture.
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Highlights
Profit before tax in 2019 stood at £624.6m, down 4% compared to £649.9m in 2018.
Profit before tax and exceptional items dropped 8% to £701.2m from £761.2m over the period.
Net income remained stable at £2.12bn. Operating expenses increased 4% year-on-year to £1.42bn.
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By GlobalDataAssets under management increased 23% to close at a new high totalled £500.2bn at the end of December 2019, helped by net inflows of £43.4bn.
The Scottish Widows mandate and Schroders Personal Wealth added £32bn and £12.6bn, respectively.
Wealth Management
AuM jumped 53% to £66.7bn in 2019 from £43.7bn in 2018. The segment recorded net new business of £14.7bn.
Asset Management
The unit’s profit before tax and exceptional items was £606.9m in 2019, a fall of 10% from £670.8m a year ago. Profit before tax dropped 4% to £565.5m from £588.2m.
Private Assets & Alternatives
The unit’s AuM increased 16% to £44.2bn in 2019 from £38bn in 2018.
The business contributed to net inflows of £2.8bn in 2019.
Solutions
AuM at this unit increased to £142.8bn from £95.9bn, driven by £34.5bn in net new inflows.
Mutual Funds
AuM increased to £102.4bn from £95.1bn in spite of net outflows of £1.5bn.
Institutional
AuM increased to £144.1bn from £134.5bn, even after net outflows of £7.1bn.
The year 2019 was busy for Schroders. Last year, Schroders and Lloyds Banking Group launched their joint financial planning business called Schroders Personal Wealth.
Besides, in 2019, Schroders snapped up the wealth management arm of Thirdrock Group, Blue Asset Management, and a majority stake in BlueOrchard.
Schroders also became the sole owner of Secquaero Advisors last year.
Schroders group CEO Peter Harrison said: “Over the last few years we have been re-positioning our business behind a clear vision to move closer to our end clients through Wealth Management, expand our capabilities in Private Assets and grow our Solutions business.
“Today, these business areas represent over half of our clients’ assets under management.”
Harrison further offered his outlook on the deadly coronavirus outbreak, saying that it creating considerable uncertainty for markets.
He noted: “We believe that our business resilience is sufficient to deal with this, but the impact on economies and markets will be highly correlated with how effective containment measures are.”
