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July 30, 2020

Wealth Management tempers Schroders performance in challenging market

British fund manager Schroders registered a fall in pre-tax profit in H1 2020. However, net inflows of £38.1bn ($49.5bn), mainly driven by Solutions and Wealth Management, helped the firm buck the turbulence caused by the Covid-19 crisis.

Key metrics

Profit before tax and exceptional items stood at £306.2m in the first six months of 2020, down 10% from £340.4m a year ago.

Net operating revenue dipped 2% to £971.6m from £993.3m over the period.

Net income dropped 3% to £1bn on a year-on-year basis.

However, joint ventures and associates had a strong first half and contributed £27.6m, compared with £14.1m in H1 2019.

Assets under management (AUM) were £525.8bn at the end of June 2020, a 5% increase from £500.2bn at end-2019.

This was driven by net inflows of £38.1bn versus outflows of £1.2bn in the previous year.

Schroders Wealth Management reports strong H1 2020; Mutual Funds lags

Wealth Management reported inflows of £1.3bn in this first half, including £800m from Cazenove Capital clients, £400m through Benchmark Capital, and £100m through Schroders Personal Wealth.

This is higher than last year’s net inflows of £900m.

Profit before tax and exceptional items in Wealth Management soared 40% to £60.3m from £43.2m.

Supported by continued client demand, Solutions strategies recorded inflows of £42.7bn in H1 2020 compared with £2.1bn in H1 2019.

AUM at Private Assets & Alternatives was £45.3bn as of 30 June 2020, up from £44.2bn at the end of December 2019.

However, the unit reported net outflows of £400m in H1 2020, the same as the prior year.

Private Assets strategies including Real Estate, Private Equity and Infrastructure saw client demand though more liquid alternatives including Emerging Market Debt Absolute Return and GAIA range of UCITS-hedge funds reported outflows.

In Asset Management, profit before tax and exceptional items decreased 11% to £260.3m from £292.4m.

Net outflows at the Institutional business narrowed to £700m from £2bn a year ago.

The business saw inflows from UK-based clients, which were offset by redemptions mainly in equity strategies from Asia Pacific clients.

Redemptions from equity products resulted in £4.8bn of net outflows in Mutual Funds, compared with £1.8bn in outflows in H1 2019.

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