SJP pats itself on the back for Woodford mandate

Net inflows fall £800m at the FTSE 100 wealth manager


St James’s Place has patted itself on the back for putting clients in a segregated mandate managed by Neil Woodford rather than his gated Equity Income fund as it reveals inflows have taken an £800m hit in its H1 2019 results.

The FTSE 100 wealth manager now has £109.3bn in assets under management compared to £96.6bn for the same reporting period last year. However, net inflows were £4.4bn in the latest results compared to £5.2bn last year.

SJP chief executive Andrew Croft (pictured) blamed the uncertain macro-economic and political environment for the challenging first half and did not suggest the reputational hit from the firm’s association with Woodford had anything to do with the lower flows.

Avoiding Woodford suspension

Instead, SJP said that clients had benefited by not being trapped in the third-party Woodford Equity Income fund, which is now forecast to open in December this year.

“Our segregated mandate with WIM limited the investments to liquid stocks and did not allow investments in unquoted stocks, and consequently our clients continued to have full access to their investments,” the results said.

Two days after Woodford Equity Income suspended, SJP appointed Columbia Threadneedle and RWC Partners as managers of the SJP UK High Income, UK Equity (Life and Pension), Income Distribution (Life) and SJPI UK High Income funds Woodford had previously run.

Despite not facing the same liquidity problems as Woodford Equity Income, SJP’s segregated mandates still delivered disappointing performance with SJP UK High Income being the second-worst performing fund in the month of May.

SJP UK High Income performance

SJP UK High Income-2.70-13.77-12.03-2.51
FTSE All Share11.702.5427.9539.06
Source: FE Analytics

Mis-selling allegations go unaddressed

The results did not address misselling allegations highlighted by the Sunday Times this month claiming an adviser in its network misled a client and forged documents.

In a preview published last week, Bloomberg Intelligence said the results may give management a chance to address the reports.

Last week, SJP told Portfolio Adviser that it rejects any allegation that the documents were forged, or that doctored files were gives to the Ombudsman. It claimed that the allegations are “simply not true”.

City sticks by resilient business model

While inflows were lower than expected, analysts continued to back SJP’s resilient business model pointing to its record high AUM.

JP Morgan Cazenove said its key takeaway was that overall FUM “continues to grow strongly due to consistent net inflows momentum and market support” while Citi said the results were in line with consensus “reflecting the relative resilience of the business model”.

Brexit risk was a concern for Citi due to concerns about the effect on net new business, while JP Morgan Cazenove is overweight SJP because “consistent net inflows should drive the share price higher once Brexit uncertainty is reduced”.

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