Schroders sees outflows of £10.6bn
GLOBAL - Schroders has admitted it saw net institutional outflows of £10.6b (€13bn) in 2007, despite winning over 100 new mandates in the UK alone.
The investment house has revealed in its preliminary end of year results the company saw outflows from it UK balanced and UK equities sectors, as well as from Japanese and Asian equities, but claims the loss of its Asian business is at least "in part driven by client asset allocation decisions.
Schroders said its fees on business won in 2007 were higher than the fees on business lost and income is said to have increased - the gross margin of average funds under management is 60bps compared with 5bps in 206 - and investment performance is said to have improved as 69% of its institutional funds under management outperformed their benchmarks over a three-year period.
But that has failed to stem the outflows, and institutional assets under management dropped to £73.2bn in 2007 from £77.4bn in 2006 - a difference of £4.2bn.
In contrast, total group assets under management grew from £128.1bn to £139.1bn.
Institutional alternative funds under management also rose to £15.9bn - up 25% on the previous year - as Schroders widened interest in its property, fund of hedge funds, private equity fund of funds, emerging market debt, commodities and agriculture fund offerings.
That said, Michael Dobson, chief executive, warned in the report of continuing market turbulence and suggested conditions could hurt investor returns.
"Recent months have seen a setback in equity markets and high levels of volatility as the impact of subprime crisis in America has spread to world risk appetite and retail flows across the industry have fallen back sharply. We expect volatile market conditions to persist through much of 2008 and as a result we envisage a less favourable environment for our businesses," said Dobson.
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