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Schroders, one of the largest asset managers in the UK, has reported a jump in outflows over the last quarter, sending its stock price plummeting more than 14 per cent in early deals in London.
The company reported a new high in assets under management of £777.4bn, with net outflows for the three months to the end of September at £2.3bn and positive market movements of £6bn.
Investors pulled £700m from the group’s £542.5bn asset management arm during the quarter. However, according to the quarterly update, investors also deposited £1bn into its wealth management business.
The update sent shares down to around 314p, their lowest level since late 2012.
Withdrawals in asset management came almost entirely from Schroders Solutions, which focuses on institutional clients. Pension funds and insurance companies pulled £2.7bn from the firm.
Schroders noted the problem is likely to worsen this quarter, as around £8bn is set to be pulled from a legacy Scottish Widows mandate. The firm warned that around £2bn is also set to be pulled by three other institutional clients from this division.
Meanwhile, £2.6bn was pulled from joint ventures and associates, which the firm credited to “continued market volatility in China”.
The firm said that wealth management performed so strongly on inflows thanks to its advice affiliate Cazenove Capital.
“Clients continue to benefit from the strength of our diverse client proposition, notably in the third quarter in our mutual funds business and Cazenove Capital,” said Schroders CFO Richard Oldfield.
“As the new Group CEO, I will be leading a business with a strong investment franchise, deep client relationships, exceptional talent and significant potential for profitable growth. I will do what is necessary to deliver on this potential.
“Standing still is not an option for Schroders in today’s fast-changing market landscape. We must focus to grow, build greater commercial discipline and drive efficiencies through simplification and flawless execution.”
Schroders added that it remained on track to achieve its net new business target of between five and seven per cent annually.