Schroders hit by profit fall but assets up

FUND management giant Schroders yesterday reported a 73.2 per cent pre-tax profit fall in the first half of the year, although the firm also said investments had put &pound;3.9bn into its funds in the period. <br /><br />The group said pre-tax profits after exceptional items were &pound;36.3m, sharply lower than the &pound;135.7m profits last year, due to the recent sustained falls in its all-important level of assets under management.<br /><br />But, the asset levels rose rose from &pound;110.2bn at the end of December to &pound;113.3bn at the end of June, after a burst of new client investment in its funds.<br /><br />Chief executive Michael Dobson said inflows of client capital were strong on the bond-fund side. This was because consumers were making virtually nothing from their bank deposit accounts in the period, due to the hisotrically low rates of interest.<br /><br />As markets recover over the longer term, investors will &ldquo;go up the risk ladder&rdquo; moving more money into equities, he added.<br /><br />Dobson said he &ldquo;would not be at all surprised&rdquo; to see some consolidation for stock markets after the strong gains of the last few months, but added he doesn&rsquo;t expect markets to return to their March lows. <br /><br />The firm said 80 per cent of its funds performed better than their benchmarks in the last year, with 77 per cent now registering outperformance over the last three years.<br /><br />Cazenove analyst Rae Maile said the results were better than forecast, adding profit performance was aided by &ldquo;a materially stronger-than-expected&rdquo; set of client inflows in the second quarter in particular. <br /><br />Shares of the firm rose almost four per cent on the results to just over 1,000p, compared with a low over the last year of 658p.