Although the asset management group saw gross inflows of £48.9bn, these were cancelled out completely by gross outflows for the same amount.
The group as a whole took in net inflows of £1.2bn during the period. However, Schroders’ 65% stake in fintech firm Benchmark Capital, which it acquired for £86m in November 2016, contributed £700m to that figure. The group suffered net outflows of £200m from intermediaries, offsetting £200m in net flows on the institutional side.
While the flows figures were not as grim as some analysts predicted, new business flows were exclusively driven by its wealth management division.
With positive net flows coming from just one segment of the business, assets under management and administration nudged up 0.54% to £449.4bn.
Sluggish flows
Schroders’ annual net flows have become progressively sluggish in recent years.
Whereas net flows hit £24.8bn in 2014 and accounted for most of the growth in AUM, they fell steeply to £1.1bn in 2016.
Net flows for the full year 2017 spiked noticeably to £9.6bn but AUM growth was driven primarily by a combination of investment returns (£31.6bn) and acquisitions (£8.5bn).
Investment returns have had a negative impact on AUM so far this year, denting total assets by £2.3bn.
Diversified business
Chief executive Peter Harrison said the group delivered good results and robust revenue growth against a challenging backdrop by focusing on expanding into new markets and continuing to grow its product line.
Net income across the group was up 11% to £1.09bn from £974.4bn.
Profit before tax after factoring out exceptional items rose 8% to £371.1m.
“Our diversified business model has again proven its worth,” Harrison said. “Wealth management has seen strong client demand and we have continued to expand our capabilities within private assets and alternatives, offsetting industry headwinds in other areas. We remain confident that we can generate growth through the cycle and that we are well placed to continue to create value for our clients and shareholders over the long term.”
Schroders shares were down 4.3% at £30.85p at the time of writing.
