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Schroders shares tumbled to their lowest in more than 10 years on Tuesday after the FTSE 100 asset manager warned it faced outflows of about £10bn this quarter.
Shares in one of Britain’s best-known asset managers were down more than 10 per cent in early trading, taking their decline this year to 25 per cent, and laying bare the difficulty facing incoming chief executive Richard Oldfield in reviving the group’s fortunes.
In his first remarks to investors, Oldfield, who takes over the top job from Peter Harrison next week, vowed on Tuesday to improve the company’s “focus and execution”.
Oldfield, who is at present the asset manager’s chief financial officer after joining from professional services firm PwC last year, inherits a company with a bloated cost base and is confronting fundamental challenges to its business model, including from the rise of low-cost passive investing.
In a trading update on Tuesday, Schroders said its solutions business, which offers outsourced chief investment officers and liability driven investing to pension funds, would face an outflow of about £8bn this quarter from its legacy Scottish Widows mandate while three institutional clients intended to withdraw about £2bn in the period.
The blows come as Schroders suffered £2.3bn of outflows in the three months to September, leaving its total assets under management at £777.4bn. Its joint ventures in China and India also suffered in the third quarter, recording outflows of £2.6bn as markets in Shanghai endured wild swings.
Addressing analysts, Oldfield acknowledged the need to increase revenues and lower costs, saying that “we have to save to invest to grow”.
He added: “What I don’t think we can do is an exercise in shrinking ourselves to greatness by taking costs out because I actually really believe in the potential of this business.”
Under Harrison, Schroders sought to offset the decline of its traditional mutual funds business by pushing into fast-growing areas such as private markets, wealth management and solutions.
While Schroders’ overall assets under management rose under Harrison, boosted by several acquisitions, its profits tumbled and the group’s market capitalisation shrank.
Oldfield said: “My initial priority is to focus on simplification, commercial discipline and flawless execution . . . we’re going to be thinking about how and where to build on those strong foundations we already have in place.”
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