By Jemima Kelly
LONDON, March 6 (Reuters) - British fund manager Schroders reported a higher-than-expected 41 percent rise in 2013 core profit, helped by acquisitions and new money flows from retail investors.
Schroders' results follow strong profit increases from competitors including Jupiter, Henderson and St James's Place, reflecting buoyant equity markets.
Shares in Schroders were 3 percent higher in morning trade on Thursday, the third-strongest performer on the FTSE 100 index of blue-chip stocks.
However Chief Executive Michael Dobson warned 2014 might be more challenging for investors.
"We think high-quality equities are still the place to be but we're not projecting the same kind of performance as we saw last year," Dobson said, citing instability in Ukraine and other emerging markets.
Schroders' pretax profit before exceptional items rose to 507.8 million pounds ($849.58 million) last year, ahead of a Schroders' poll of analysts that forecast profit of 473.9 million pounds.
Overall net inflows fell 16 percent to 7.9 billion pounds following the expected loss of two large but low-margin accounts, while money from more profitable retail investors rose 45 percent to 4.9 billion pounds.
Assets under management were up 24 percent at a record 262.9 billion pounds on Dec. 31.
Schroders completed the biggest acquisition in its more than 200-year history when it bought rival Cazenove Capital for 385 million pounds last July, almost tripling profit at its wealth management business.
The London-based company also bought U.S. investment firm STW Fixed Income for 34.7 million pounds in April.
Dobson said company was not on a major buying spree.
"We were very pleased to do those two transactions but our focus now is really back to growing the business organically, as it's always been," he said.
Schroders said it would pay a final dividend of 42 pence per share, bringing the full-year dividend to 58 pence per share, up 35 percent on 2012.