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Schroders Tumbles as Clients Pull $1.7 Billion in June

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Aug. 8 (Bloomberg) -- Schroders Plc, the U.K.’s biggest fund manager by assets, fell by the most almost two years in London trading after clients withdrew 1.1 billion pounds ($1.7 billion) the second quarter.

The outflow in June reduced net inflows for the first six months of the year to 4.5 billion pounds, the London-based fund manager said in a statement today as it reported earnings.

The Federal Reserve indicated on June 19 that it may scale back its purchases of fixed-income assets, triggering a sell-off in bonds and some currencies. One single fixed-income client pulled about $900 million that month as it sought to spread its business across multiple fund managers, Chief Executive Officer Michael Dobson told reporters on a call today, without identifying the customer.

“The prospect of the easy monetary policy of recent years being unwound is likely to weigh on markets and investor demand will therefore remain unpredictable,” the firm said in a statement today.

The stock slid 5.3 percent to 2,368 pence in London trading, the steepest one-day decline since Sept. 2011. The firm boosted its first-half dividend to 16 pence from 13 pence.

Net income for the first half climbed to 174.2 million pounds from 137.1 million pounds, Schroders said. Profit from asset management rose 21 percent to 212.1 million pounds, while income from its private banking division was little-changed at 10.6 million pounds. Revenue rose 17 percent to 815.6 million pounds.

Acquisitions

Schroders has been making acquisitions to counter stagnating revenue at its private-banking unit and add assets. The company acquired STW Fixed Income Management LLC, a U.S.- based bond fund manager, in April, helping to increase assets under management 21 percent to 235.7 billion pounds. The July purchase of Cazenove Capital will add another 20 billion pounds of assets in the third quarter.

“We continue to strengthen our business in the U.K. and internationally and believe this will lead to further opportunities for growth in the long term,” Dobson said. “We continue to see good long-term growth prospects.”

Schroders named Rory Bateman head of U.K. equities in May after Richard Buxton announced his departure for competitor Old Mutual Plc. Clients pulled about 1.5 billion pounds in the period from the fund Buxton managed, Dobson said on the call.

To contact the reporter on this story: Liam Vaughan in London at lvaughan6@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net

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