St James’s Place (SJP) has warned of a slowdown in fund flows but one commentator says the firm’s 2018 results will come as a “relief” for investors who had been poised for worse news.
The group reported funds under management at £95.6bn, up from £90.7bn in 2017. It saw gross inflows of £15.7bn, up from £14.6bn in 2017. Net inflows were £10.3bn, up from £9.5bn in 2017.
However, the typical investment return on its funds during the period was -4.3% after charges, compared with the assumed investment return of 1.8%.
Adrian Lowcock, head of personal investing at Willis Owen, said the results are still likely to come “as a relief for investors” who had earlier this year been warned of a slowing in inflows.
SJP chief executive Andrew Croft (pictured) said the pace of fund flows moderated in what was a challenging year with many external factors “not in our control” such as market volatility.
He added: “The business continues to perform well relative to the industry. However, challenging external factors, like those currently being experienced, are not in our control and the pace of fund flows has moderated compared with last year.
“I would note though that the inflows for the same period last year represent a very strong comparative and March typically accounts for around 50% of the first quarter’s flows.”
Global growth fears overdone
SJP said a number of factors lay behind the sell-off including Brexit concerns, US-China trade tensions and slowing growth in China. It also said growth could potentially slow in the US as the Trump tax-cut stimulus fades, and the Fed tightens monetary policy.
Croft said: “After the downturn of late 2018, markets posted a strong first month in 2019, a recovery that has been reflected across all our portfolios, reflecting a growing belief that initial global growth fears had been overdone.
“I am pleased to report a good set of results for 2018, building on an exceptional outcome in 2017 and despite a difficult external environment in the last quarter of the year. This demonstrates once again the resilience of our business.”
Lowcock added SJP is naturally susceptible to changes in sentiment and investor confidence with any big sell-off in markets having an impact on inflows in the short term as well as total assets under management.
“Given the size of SJP it is now harder for organic growth to make up the bulk of revenues which means that market performance is increasingly going to affect the business. However, the business still posted growth in what was a difficult year for markets and the proposition remains as popular as ever.”
Elsewhere, SJP also said its partnership numbers are now at 3,954 advisers, an 8% increase over the year. It took on a net 293 advisers through a combination of its adviser recruitment channels and academy initiatives.
