Schroders said today its assets had plunged by nearly £21bn in the past quarter as it became the latest asset manager to report its holdings had been ravaged by geopolitical volatility and a looming recession this year.
In a trading this morning, the FTSE 100 investor said its assets under management had tumbled to £752.4bn at the end of September in a sharp fall from £773bn at the end of June.
The investor’s solutions business – which houses liability-driven investment (LDI) funds that manage cash on behalf of pension schemes – was caught up in the fall-out of the chancellor’s mini-budget two weeks ago and suffered a £20bn plunge in assets.
The fall comes amid a brutal set of results for London’s asset managers this week in which the scale of the damage of the past few months has been laid bare for big investors.
Volatility on equity and bond markets this year has caused cash flows to reverse for money managers and left them haemorrhaging cash. Data from investment analysis firm Morningstar showed that outflows from UK-domiciled open-end funds reached £5.2bn in August – the highest monthly figure in over 10 years.
It brings total redemptions from equity funds over the past four months to about £15bn.
Schroders tumble came as fund manager Jupiter also reported a £1.4bn fall to £47.4bn pounds in its AUM at the end of September, one day after FTSE 250 investor Liontrust said more than £1.6bn had been pulled from its funds in the three months through September.
Liontrust chief John Ions said yesterday soaring inflation and rising interest rates had ushered in a “new environment” for investors.
Fund managers had scooped up cash from investors though the covid pandemic as investors looked to capitalise on a rebound in markets, but investors have since been looking to shield their cash from wild swings this year.
London’s top wealth managers have reported a similarly brutal period in the past three months. St. James’s Place’s funds under management tumbled more than three per cent to £143bn on last year, while FTSE 250 investor Quilter said its assets had fallen to £96.9bn as inflows slowed to £200m.
Analysts said that fund managers will have been bracing for the impact of volatility and have been looking to shiedl their investment strategies from the fall out.
“Market sensitivity won’t be a surprise to these asset managers – stock market falls often hit asset managers with the double whammy of fewer funds under management and negative flows sentiment,” said Emma Wall, analyst at Hargreaves Lansdown.
“But many have been doing a good job of diversifying in recent years. Schroders acquisitions have taken it into solutions, private markets and impact investing for example, which are less correlated with listed equity and bond markets both in terms of returns and demand.”