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BAE SYSTEMS PLC

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Schroders' assets near $1 trillion, aided by low interest rates

07/29/2021 | 05:46am EDT
FILE PHOTO: A Schroders sign is seen outside a building in the City of London

(Reuters) - Low interest rates are bolstering money managers like Schroders, its chief executive said on Thursday as the British firm posted a jump in first-half profits and record high assets under management of 700.4 billion pounds ($977.7 billion).

The low rate environment has been a major driver of flows into equities while competing assets of cash or fixed income were "very unattractive", CEO Peter Harrison told Reuters.

Robust investor sentiment amid trillions of dollars in government stimulus has also helped, with Schroders saying demand for its mutual funds and higher margin equity products increased.

"Savings rates are higher but many of the flows have also come from institutions, so I think the key driver will be interest rates remaining low and markets remaining stable," Harrison said.

Schroders, which lifted its interim dividend by 6% to 37 pence a share, said pretax profit rose 33% to 373.9 million pounds ($521.03 million) for the six months ended June 30. It booked in net new business of 17.9 billion pounds.

The company said total assets under management climbed 6%, with strong demand for its higher margin equity-focused mutual funds, especially from clients in the United States and continental Europe, helped by rising markets.

Financial updates from three other asset managers this week also showed inflows running at billions of pounds.

However Harrison said he was mindful of the fact that markets had "travelled up a long way".

"There is clearly lots of evidence, particularly in private markets of a bit of trough. It is not something that is keeping me awake a lot at night at the moment," he added.

Schroders also cautioned that if inflationary pressures persisted, or the recovery in economic growth disappointed, there could be increased market volatility which would impact its business.

"There is a tug of war going on. On the one hand we have fears of inflation and on the other hand we have fears of growth slowing. Three weeks ago the world was talking about more inflation and now the world is more worried about too little growth," Harrison said.

"Somebody used the phrase goldilocks ... arguably we are in that place where it is neither one nor the other, and that is not too bad for financial markets."

Separately, Schroders announced that Elizabeth Corley would be joining as a non-executive director, and that she would succeed Michael Dobson as its chairperson at the end of the company's shareholder meeting in April next year.

Corley, currently a director at Pearson, BAE Systems and Morgan Stanley, has previously headed Allianz Global Investors.

($1 = 0.7176 pounds)

(Reporting by Muvija M in Bengaluru and Abhinav Ramnarayan in London; Editing by Carolyn Cohn and Pravin Char)

By Muvija M


ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
BAE SYSTEMS PLC 0.25% 561.8 Delayed Quote.14.93%
MAN GROUP PLC -0.86% 207.8 Delayed Quote.50.58%
PEARSON PLC -0.79% 704.2 Delayed Quote.3.47%
RATHBONE BROTHERS PLC -1.09% 1988 Delayed Quote.29.09%
SCHRODERS PLC -1.05% 3665 Delayed Quote.9.65%
ST. JAMES'S PLACE PLC -1.68% 1578 Delayed Quote.39.21%
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Financials
Sales 2021 21 489 M 29 375 M 29 375 M
Net income 2021 1 432 M 1 957 M 1 957 M
Net Debt 2021 2 528 M 3 456 M 3 456 M
P/E ratio 2021 13,0x
Yield 2021 4,39%
Capitalization 17 976 M 24 573 M 24 574 M
EV / Sales 2021 0,95x
EV / Sales 2022 0,90x
Nbr of Employees 90 000
Free-Float 92,5%
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Last Close Price 561,80 GBX
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Charles Nicolas Woodburn Group Chief Executive Officer & Director
Brad Greve Group Finance Director & Director
Roger M. Carr Chairman
Steve Nicholas Millward Chief Information Officer
Benjamin Hudson Chief Technology Officer
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