Schroders hit by outflows as Buxton excels at Old Mutual

Graph downSchroders was hit with outflows of £1.1 billion (€1.3 billion) in the second quarter, its latest half-year results show.

The second-quarter outflows were recorded across institutional (£200 million), intermediary (£800 million) and private banking (£100 million) businesses.

London-listed Schroders’ total assets under management stood at £235.7 billion at the end of June.

Flows over six months were more positive. While the private banking part of the business suffered outflows (£300 million), the institutional part of the business took in £2.1 billion and intermediary business £2.7 billion.

The outflows in the second quarter coincide with the departure of its star manager Richard Buxton, who left for Old Mutual Global Investors, which launched a replica UK equity fund for him.

His departure was a blow, especially because his successor and deputy, Errol Francis, left with him.

Juliet Schooling Latter, research director at financial advisor Chelsea, says: “It's not a surprise that Schroders has seen outflows from Schroder UK Alpha as Old Mutual have launched a replica fund for Buxton, and his reputation is such that many investors will follow the manager.”

Buxton joined Old Mutual on July 17 and pulled in £250 million in the first six weeks, Old Mutual says. In July alone, inflows were £100 million.

Schroders was unable to comment further on whether the outflows were linked to the departure of Buxton.

Since Buxton’s departure, Schroders has hired Alex Breese and Philip Matthews for its UK equity team. Breese was head of UK equities and manager of the Neptune UK Special Situations fund, while Matthews was manager of the Jupiter Growth & Income Fund.

In a comment issued at the time of the announcement, Chelsea said: “Neither manager has the same gravitas as Buxton, but they are sound replacements for the funds Richard and his deputy ran.”

Schroders says 67% of its assets under management are outperforming their respective benchmark or peer group over three years, which puts it in a “competitive” position.

But Schooling Latter says while the figure looks very good at first, the number of actual funds outperforming is quite a bit lower.

She says “this figure is being skewed somewhat by some larger funds doing well".

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