UPDATE 2-Schroders assets under management hit record high in first quarter

Thu May 1, 2014 4:51am EDT

Related Topics

* AuM at 268 bln stg vs 262.9 bln at end-Dec

* Takes in new money across range of asset classes

* Market uncertainty may hit near-term retail demand

* Q1 pretax pre one-offs 130.7 mln stg vs year-ago 115 mln

* Shares up 2.9 pct in 0.4 pct stronger FTSE 100 (Adds CEO call comments, shares)

By Simon Jessop

LONDON, May 1 (Reuters) - Assets under management at British fund manager Schroders hit a record high in the first quarter, after strong retail demand helped it take in new money across a range of products.

The results published on Thursday are the latest evidence of a buoyant UK asset management sector, as retail investors around the world put money to work in financial markets, and follow similarly positive numbers from smaller peers Henderson and St James's Place.

Schroders said it had won 2.8 billion pounds from retail clients and 1 billion from institutions across multi-asset, equities and fixed income products, taking total assets up 2 percent to 268 billion pounds ($452.5 billion) from 262.9 billion at the end of December.

Chief Executive Michael Dobson said the year had started well, with good net inflows in retail during April, though these had not been at the same level as in the first quarter. He said financial market flux could dampen investor demand in the near term.

"You can, from a seasonal point of view, get strong flows at the start of the year, and so we're just sounding a note of caution given the uncertainty around," Dobson said, citing tensions in the Middle East and Ukraine, as well as the impact of the gradual withdrawal of U.S. monetary stimulus.

"Markets are clearly, after the very strong performance in 2013 and the latter part of 2012, to some extent moving sideways... it wouldn't be surprising... if we saw a quiet time."

Dobson said retail demand had been particularly strong in continental Europe, where it took in 1.7 billion pounds in net new money, and the UK, where it took in around 700 million. Asia and the United States were also positive.

The bulk of the new money, around 1.6 billion pounds, went into its equity funds, he added.

POTENTIAL WINNER

Shares in Schroders, at 6.9 billion pounds the UK's largest standalone fund manager by stock market value, were up 2.9 percent by 0802 GMT, ranking among the top gainers at that time in the FTSE 100 blue chip index.

Heading into the results, there were no "sell" or "strong sell" recommendations on the stock from the 17 analysts covering it, with eight advising clients to "hold" positions, seven advising "buy" and two "strong buy", data from Thomson Reuters showed.

The firm has been flagged by analysts as one of the main potential winners from a UK government plan to shake up the pensions and savings industry, which could lead to billions more pounds being invested in mutual funds as opposed to annuities.

On Thursday, Schroders, still part-owned by the founding family that gave the company its name in the 19th Century, said there was a wide range of opportunities on the institutional side and it had a good pipeline of business, including a 12.2 billion pounds mandate from insurer Friends Life (part of Resolution Ltd ), announced in March.

Dobson said the UK government's move to give people the choice of whether to buy an annuity at retirement were important and it was working with clients to design new products. Changes to tax-free savings rules were also "at the margin ... very helpful", although both were longer-term opportunities.

Pretax profit before exceptional items - the bulk of which were related to the acquisition of Cazenove Capital and U.S. fixed income business STW - reached 130.7 million pounds, up from 115 million in the same period a year earlier, the company said in a statement on Thursday.

Analysts at JPMorgan told clients the statement "demonstrates a strong start to the year and provides further evidence of Schroders' ability to attract flows across a broad range of products. We reiterate our 'overweight' recommendation."

($1 = 0.5922 British Pounds) (Editing by Chris Vellacott and David Holmes)

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