Unit trust division boosts Rathbones as markets weigh on AUM

Rathbone Brothers said total funds under management rose to £29.2bn at the end of December 2015, 7.4% higher than the prior year, helped by a strong showing from its unit trust division.

Unit trust division boosts Rathbones as markets weigh on AUM

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But, the firm said, it remains only cautiously optimistic for 2016.

“We continue to pursue our growth objectives but will more frequently review the timing and priority of projects as long as financial markets remain subdued,” the firm said in a trading update for the three months to end December, before adding that it continues to retain an appetite for acquisitions “that fit our culture”.

The firm reported a 5.7% year-on-year jump in funds managed by Rathbone Investment Management to £26.1bn. The increase comes in the face of a 4.9% decline in the FTSE 100 over the same period, the firm said, pointing out that net inflows of £368m during the fourth quarter, saw total net inflows for the year rise to £1.4bn.

According to Numis Securities, the performance of the Investment arm was slightly below expectations, but this was offset by the better-than-expected 24% jump in funds under management at Rathbone Unit Trust Management from £2.5bn in December 2014, to £3.1bn at end December 2015, which included net inflows of £165m during the quarter.

Pointing out that the recent market weakness is unhelpful for earnings across the asset and wealth management sectors, Numis pointed out that the All-Share has only declined 2% since its last mark to market and consequently, does not expect to materially change its forecasts.

“We continue to believe Rathbones remains the quality play in the subsector, justifying the prospective multiple of 18.9x earnings,” it said, adding: “Rathbones is one of the more reliable PWMs in terms of consistent growth and stable margins.”

New office

In a separate announcement the firm said it has exchanged contracts for a 17-year lease on 75,000 sq ft of office space at 8 Finsbury Circus. The expanded capacity – its current premises in London’s West End, occupy only 44,000 square feet – should be sufficient, it said, to meet its longer term growth plans.

As a result of the move, the firm will incur an exceptional accounting charge of £400,000 in 2015, and as much as £9.5m in 2016.

“These charges reflect the rental costs of 8 Finsbury Circus after completion, as well as provisions for dilapidations and accelerated depreciation charges for 1 Curzon Street,” the firm said.

A second exceptional charge will be incurred when the current offices are vacated, which Rathbones said, based on current assumptions could amount to £8m.

 

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