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Schroders loses €12.2bn in institutional assets

UK – Asset management group Schroders says it had a net outflow of £8.4bn (€12.2bn) of institutional assets in 2004 as investors withdrew from balanced mandates.

“In institutional we had net outflows during the year of £8.4bn (2003: £4.3bn), principally due to restructuring by UK institutions away from balanced mandates,” the firm said in its 2004 earnings report. “Two UK clients alone accounted for £3bn of net outflows.”

“The institutional business had a mixed year,” board member Massimo Tosato told IPE.

Tosato, head of distribution, said the firm is working to reduce the impact of the shift away from balanced mandates. He said the firm has around £15bn remaining in such ‘multi-asset’ portfolios. It is developing a so-called ‘new balanced’ model. “You will not find a complacent business at Schroders,” he added.

The firm said it took on £8.5bn of new institutional mandates “across regions and in a range of asset classes” in 2004.

Total institutional funds under management ended the year at £69.1bn, from £71.4bn at the end of 2003. Total AUM was up seven percent at £105.6bn.

The company’s pre-tax profit rose to £191m from £65m in 2003. Asset management profit before tax almost doubled to £120.8m. Asset management net revenues rose to £491m from £417.8m.

“2004 was a successful year for Schroders, with increased revenues and significantly higher profits in asset management, good investment performance and exceptional returns from private equity,” the company said in a statement.

“Profitability in 2004 increased significantly due to higher revenues in asset management and exceptional private equity gains,” said chief executive Michael Dobson in the statement.

“Whilst we do not expect the exceptional private equity performance to be repeated in 2005, we see continued momentum in our asset management business.”

The company also said that its £389.2m pension scheme has a deficit under FRS17 of £21.2m.

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