Schroders hits highest ever level of assets, but revenue falls

Dividends growthAssets under management at UK-listed fund manager Schroders rose to their highest ever level as investors shifted out of underweight equity positions and markets increased towards the end of last year.

Assets stood at £212 billion (€246 billion) at the end of 2012 compared to £187 billion for 2011, the company says in its 2012 annual report released today.

But profit before tax for the group – which includes a private banking business - was down to £360 million from £407 million.

The asset management profit before tax fell to £349 million from £389 million and net revenue was 3% down to £1.02 billion. This included a decline in performance fees to £28 million from £37 million.

Schroders says it continued to invest in its business last year, including IT upgrades to gain scale benefits.

It also says 71% of funds outperformed their benchmark or peer group over three years, and 78% over one year.

The company made two acquisitions in the year: a 25% stake in India’s Axis Asset Management, and US fixed income manager STW.

Net revenue in the private bank segment saw a worse drop of 17% to £94.4 million.

The private bank faced “a number of challenges” in 2012, including “subdued client activity” and business outflows, Schroders says.

The fund manager highlights outflows from its cash management service and its Swiss business, reflecting a change in its client base. However, inflows continued to its UK private client and charity businesses.

Jonathan Goslin, analyst at Edison Investment Research, says the fall in profit before tax was in line with expectation.

He adds that changing product mix led to a reduction in revenue margins while an increase in pension costs pushed up operating costs.

Schroders’ dividend increased 10% to 43p.

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