By Iain Withers
LONDON (Reuters) -Schroders reported worse-than-expected third quarter outflows and the imminent loss of further big-ticket client mandates on Tuesday, in a gloomy update that sent shares tumbling days before new CEO Richard Oldfield steps into his role.
Shares of Britain’s largest standalone fund manager fell as much as 14% in early trading. They were last down 12%, at their lowest since 2020.
Schroders reported quarterly net outflows of 2.3 billion pounds ($3 billion), driven in part by market volatility in China hitting demand for its joint venture funds with local firm Bank of Communications.
Schroders indicated it was also bracing for a tough fourth quarter, with around 10 billion pounds of funds expected to be withdrawn from four departing clients, including from Lloyds’ Scottish Widows.
While investors knew Scottish Widows was exiting, the 8 billion pounds being pulled by them in the fourth quarter was new information, as was the departure of three other unnamed clients.
Analysts at JPMorgan described Schroders’ update as “disappointing”, with the flows “much worse” than they had expected.
Former finance chief Oldfield will formally replace retiring CEO Peter Harrison on Friday and will be tasked with rebooting Schroders’ performance.
“Standing still is not an option for Schroders in today’s fast-changing market landscape,” Oldfield said in a statement.
Mid-sized asset managers have in recent years been squeezed by relentless competition from low-cost tracker funds sold by giants like BlackRock and inflationary pressure on costs.
Schroders said it actually saw slim net inflows of around 300 million pounds for the third quarter after joint ventures were stripped out of the figures, while total assets under management were broadly flat at 777.4 billion pounds.
Oldfield was named CEO in September, and the company further reshuffled its top team that month, promoting operating chief Meagen Burnett to chief financial officer and elevating its investment boss Johanna Kyrklund to the board.
($1 = 0.7707 pounds)
(Reporting by Iain Withers, additional reporting by Samuel Indyk, editing by Sinead Cruise, Kirsten Donovan)
