Schroders flies high thanks to fixed income

Suzie Neuwirth
ASSET manager Schroders yesterday beat forecasts with a sharp rise in first-half profits and nearly doubled its new business, thanks to a particularly strong performance in its fixed income division.

The FTSE 100-quoted firm unveiled a 17 per cent rise in adjusted pre-tax profit to £305.7m, while net inflows rose to £8.8bn, exceeding forecasts of £8.1m, compared with £4.8bn in the first half of last year.

Its assets under management increased by 14 per cent to £309.9bn and it raised its dividend by 21 per cent to 29p per share.

“We generated £8.8bn of net new business in the first half of 2015 despite heightened volatility in markets towards the end of the period,” said chief executive Michael Dobson.

“Net inflows were particularly strong in fixed income and, regionally, in Asia Pacific and continental Europe.”

Investors have increasingly turned to funds in recent months, looking for higher returns amid continuing low interest rates in developed economies.

This has been reflected in a raft of buoyant results from fund managers this week, with Jupiter Fund Management, Rathbone Brothers and St James’s Place all reporting increases in new business.

Despite a solid performance, Schroders remained cautious in its outlook.

“In the short term, with continuing uncertainty in the Eurozone and China and the prospect of interest rate rises in the US, market volatility is likely to remain high which may impact retail investor demand in particular,” it said.

Shares in the UK’s largest listed asset manager climbed 2.3 per cent in early trading, before settling to close 0.6 per cent higher at 3,110p.

“We continue to believe that Schroders is a dull and boring company, which is precisely why we think it is interesting as a long term investment,” said analysts at Numis.