UK – Schroders says it lost 2.7 billion pounds (3.8 billion euros) in institutional assets in the third quarter, including 1.6 billion pounds in fixed income assets managed for a single client.
The latest multi-billion pound asset loss follows a loss of four billion pounds in balanced mandates in the first half as UK clients restructured their portfolios. The company says the revenue impact of the asset withdrawals is limited as they are low margin.
“From an opening position of 100.0 billion pounds at June 30 2004, funds under management fell 0.2% in the quarter to 99.8 billion pounds,” the London-based firm said in a release.
“Net business outflows amounted to 1.3 billion pounds in the quarter, with net inflows of 1.2 billion in retail and 0.2 billion in private banking, exceeded by net outflows in institutional of 2.7 billion.
“This latter figure includes the loss of 1.6 billion of fixed income assets managed for a single client on a passive basis at a very low margin.” The company did not name the client.
A Schroders spokesman said: “Two clients account for 3.1 billion pounds of institutional withdrawals, one on 2bps, one on 8bps of fees.
“Flows for this reason are lumpy in nature making it difficult to predict flows as this trend unwinds. Industry surveys show the trend from balanced to specialist has accelerated in the past 12 months. We are winning specialist mandates at higher margins and clearly our specialist strength is reflected in the net retail in-flows.”
The company said its asset management profits rose to 27.1 million pounds from 15.4 million a year ago. Revenues at the unit were 121.1 million pounds, up from 107.7 million.
Group profits before goodwill amortisation and tax rose to 82.1 million pounds from 18.0 million – the figure included an exceptional 47.8 million-pound gain in private equity
“In our core business, improving margins as a consequence of the changing business mix outweighed the revenue effect of the business lost during the period.” Schroders said.