Brooks Macdonald posted a solid set of results for the first half of its financial year, as a 4.4% annualised increase in net inflows and a creditable investment performance saw funds under management (FUM) reach £16.2bn.
The 3.6% FUM growth in the six months to 31 December 2022 was fuelled principally by £347m of net inflows across the business, with Brooks’ Platform MPS attracting £540m of net inflows. This lifted FUM in its MPS segment to £3.6bn, up 20% on 1 July’s total.
However, its Bespoke Portfolio Service (BPS), which accounts for £8.6bn of FUM, experienced £88m of net outflows.
Brooks’ UKIM Discretionary arm, which includes its MPS and BPS, proved more attractive to investors than its £1.8bn Funds business, which suffered net outflows of £75m across the half.
Each division contributed positively in terms of investment performance. In all, Brooks’ investments returned 1.4%, ahead of the benchmark index, the MSCI Pimfa Private Investor Balanced Index, which recorded a decline of 0.3%.
FUM in its International arm remained broadly flat over the period, with marginal net outflows offset by positive investment performance.
At £8.2m, statutory profit after tax was down 20% on the equivalent period a year earlier, a drop that is reflective of the fact that Brooks’ FUM is yet to recover to the £17.3bn it had on its books at the end of a strong 2021 for the firm.
Profit margins also tightened to 25%, but CEO Andrew Shepard (pictured) was “encouraged” by its enduring robustness.
He praised the firm’s cost discipline, and added: “Overall, our financial performance for the period was solid, with positive net flows demonstrating continuing intermediary and client demand for our products and services.”
Brooks has experienced considerable change in its senior ranks since the turn of the year, with its CFO, COO, risk head, and head of responsible investing all either leaving, or announcing their departures.
Nevertheless, Shephard was optimistic about the coming months. He said that while the short-term geopolitical and macroeconomic outlook remains uncertain, somewhat undermining investor sentiment, he expected full-year net flows to hit 5-6%, primarily driven by the Platform MPS and Investment Solutions business.
“The fundamental opportunity for the group remains as strong as it has ever been and we are confident in our long-term prospects building on our ambitious organic and inorganic growth strategy, grounded in our purpose of realising ambitions and securing futures,” he concluded.