Schroders forecasts £45bn in Lloyds assets by year end

It reported net outflows of £1.2bn in the first half of the year

Schroders

Schroders has forecast it will take on £45bn in Lloyds assets by the end of this year, a week after losing out on £5bn of real assets to Standard Life Aberdeen (SLA).

The book of assets would push Schroders’ assets under management close to £500bn by the end of the year. Its current AUM sits at £444.4bn, up from £407bn on 1 January, according to its half-yearly results published on Thursday.

Schroders group chief executive Peter Harrison (pictured) said: “The first part of the Lloyds mandate, around £45bn of assets, will fund in the second half of the year.”

Last week, SLA said it would continue to look after £5bn of real assets for Lloyds, alongside the £30bn of passives already reported, rather than hand them to Schroders, as originally intended.

The FTSE 100 asset manager’s latest results reported net outflows of £1.2bn over the period, largely down to negative sentiment. Pre-tax profits tumbled 14% to £319m for the six months to 30 June, down from £371m in the same period last year.

Shore Financial Planning director Ben Yearsley said: “AUM figures looked good, profit not so good.”

A push towards private assets and alternatives

In its trading update Schroders said it is focusing on buoying AUM in private assets and alternatives.

Harrison said: “We have further strengthened our private assets business, including agreeing to acquire a majority stake in BlueOrchard Finance, pioneers in microfinance and impact investing. We have also continued to develop our geographic capabilities, such as our investment in China.

“In a challenging market, we continue to broaden and enhance our range of investment capabilities to help meet our clients’ needs.”

Yearsley said: “I imagine Schroders wants to focus on private assets and alternatives for two reasons: higher margins and because they are uncorrelated to more traditional equity and bond markets.”

Wealth management

Elsewhere, Schroders wealth management arm generated net income of £144m, marginally up from £143.8m in H1 2018. But pre-tax profit fell 21% to £30.1m from £37.9m during the same period last year.

Harrison said: “We look forward to the launch of Schroders Personal Wealth to the wider market, later this year.”

Earlier this week, Schroders was among seven managers to be dropped from FE’s latest crown funds ratings list.

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