UK – Schroders lost a further £5.6bn (€8.2bn) in institutional assets under management in 2005, although it said profit in the area increased by 15% due to higher margin business.
“Institutional saw net outflows, as clients continued to move away from balanced towards specialist mandates, but at a reduced level of £5.6bn (2004: £8.4bn),” the company said in its 2005 earnings release.
“Gross profit increased to £254.1m (2004: £219.6m) as a result of our focus on higher margin business, and funds under management in institutional ended the year at £78.7bn (2004: £69.1bn).”
Total funds under management, which includes retail, rose to £122.5bn from £105.6bn. Retail now constitutes 53% Schroders’ asset management gross profit.
The firm said: “Regulatory and accounting developments are acting as a catalyst for change in the asset management industry, as best practice standards are being re-evaluated and new approaches are introduced.
“Many institutional investors face significant challenges in restoring pension plan funding ratios in the face of sharp declines in long-term bond yields.”
It added it was seeing “an increasing number” of opportunities in liability driven investment for its pension fund clients.
It used this technique itself when it restructured the Schroder Retirement Benefits Scheme.
The firm made an overall pre-tax profit of £250.7m, up from £211.6m. It said it would buy London-based manager of funds of hedge funds NewFinance Capital for $101m.