Schroders slows profits slide as client cash inflows recover

RISING inflows of cash, particularly from institutional investors, allowed fund manager Schroders to slow its profit slide in the third quarter.<br /><br />Schroders yesterday reported surprisingly strong interest from investors in the second half of the year, with net inflows of &pound;7bn in the three months to 30 September.<br /><br />While &pound;3.7bn was raised from retail investors, it was the &pound;3.3bn from institutions that grabbed most attention, signalling a strong turnaround from the huge outflows to institutions earlier in the year.<br /><br />Chief executive Michael Dobson said funds under management rose to &pound;138.9bn compared to &pound;113.3bn at 30 June.<br /><br />The &pound;7bn net inflow was &pound;3.1bn higher than the second quarter, more than erasing the &pound;2.1bn outflows in the first quarter.<br /><br />The enthusiasm from investors surprised analysts who had anticipated less than &pound;2bn from institutions. Credit Suisse had tipped a total of &pound;4.7bn in inflows.<br /><br />The improving investment outlook helped Schroders put the brakes on its recent profit dive, with pre-tax profit in the third quarter down 19.2 per cent to &pound;57.8m.<br /><br />The result was received warmly in the City. Roddy Wallace, an analyst at Barclays Wealth, said: &ldquo;Although the group is a natural beneficiary of rising markets, the strong inflows suggest a good operational performance.&rdquo;<br /><br />Julius Baer said income was &pound;177.5m down from &pound;188.1m in the third quarter of 2008. The division spent a one-off &pound;1.3m on staff redundancies. Income from the group&rsquo;s Private Banking division was &pound;23.6m, down from &pound;29.0m at the same juncture last