Schroders suffers in ‘challenging’ environment as investors flee mutual funds

Tough market conditions continue to batter leading asset managers, as Schroders becomes the latest major fund house to report sliding assets.

The UK-listed manager’s mutual funds bled £2.9bn in net outflows over the first six months of 2022, reversing the net inflows of £6.4bn over the same period last year, according to the firm’s half-year report, published on 28 July.

Overall assets in the firm’s mutual funds ended the period at £102.6bn, down from £116bn, as fixed income products took a particular beating, and the “sharp decline” in equity markets led to a two basis point drop in revenue margins.

“The first half of the year was characterised by a ‘risk-off’ environment which, along with significant market falls, resulted in curtailed demand from retail investors,” Schroders said.

Schroders’ institutional business also reported net outflows of £7.6bn, compared to the £1bn in net inflows last year, “due to several clients restructuring their asset allocations”.

READ Schroders CEO says he won’t chase M&A at any cost

However, the asset manager said it was cashing in on growth areas such as private assets and sustainability.

Assets in Schroders’ private assets and alternatives division increased by 29% to reach £69.4bn. Schroders recently brought a majority stake in renewable infrastructure manager Greencoat Capital, which contributed £0.5bn of net new business.

“Our investment in sustainability has been a critical contributor to our success,” chief executive Peter Harrison said. “It was particularly evident in our mutual fund business where, despite a stock market sell-off, our equity funds saw positive client inflows.

“Currently, the environment we operate in is challenging and we anticipate the backdrop for public and private markets to remain difficult.”

To contact the author of this story with feedback or news, email Justin Cash

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