- Expects Scottish Widows legacy costs of £8 billion
- Institutional clients losses of circa £2 billion
- Year-to-date Schroders shares fall 24%
Schroders (SDR) shares fell over 12% to 319p in morning trading despite the fund management group reporting record total AUM (assets under management) of £777.4 billion for the nine months to 30 September.
There were positive net flows in the fund management group’s wealth management division driven by advised business and continued momentum in Cazenove Capital.
AUM excluding joint ventures and associated grew to £663.8 billion driven by positive net flows, but it was not all good news for the new CEO and former Schroders CFO Richard Oldfield who will assume the role on 8 November (replacing Peter Harrison who will be retiring).
CHINA VOLATILITY AND CLIENT LOSSES
The fund management group blamed negative net flows in joint ventures and associates in the third quarter on continued market volatility in China.
Schroders also noted it expects an outflow of circa £8 billion from the legacy of Scottish Widows mandate [which] ‘will affect Solutions’ and losses from three institutional clients totalling circa £2 billion.
EXPERT VIEW
Russ Mould, investment director at AJ Bell said: ‘Up until now Schroders has fared rather better than its asset management peers who have been hit by the rising popularity of passive alternatives and less than helpful trends in financial markets.
‘However, there are signs Schroders is now feeling the heat based on the significant quarterly outflows unveiled today – the highest since the onset of the pandemic. Perhaps more worryingly there is the promise of more to come.
‘All of this adds up to a difficult start for incoming boss Richard Oldfield who at least has the inside track on the challenges facing the business given his previous role as finance chief at the company.
‘Oldfield will hope the recent trends reflect short-term issues around Chinese volatility and its legacy mandate with Scottish Widows, but he has plenty to do to arrest a decline in the share price which has dragged Schroders to eleven-year lows.’
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author (Sabuhi Gard) and the editor (Martin Gamble) own shares in AJ Bell.
