Schroders profit jumps on institutional flows

LONDON Tue May 18, 2010 8:48am BST

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LONDON (Reuters) - Fund firm Schroders Plc reported a sharp rise in first-quarter pretax profit on the back of strong inflows from institutional clients, underlining a recovery in the fund management sector.

Pretax profit reached 93.2 million pounds, compared with 36.1 million before exceptionals last year.

Finance Director Kevin Parry said that after strong gains in markets, retail investor demand has slowed, although the group was seeing strong demand from institutional clients.

"Total assets under management rose 63 percent to 167.9 billion pounds, our highest level ever," he told Reuters.

"Momentum generated in the first quarter has continued in the second quarter," he said.

Shares in Schroders (SDR.L) fell by 0.2 percent to 1,306 pence, compared with a 0.5 percent drop in the FTSE 100 .FTSE. The stock has waned a little in recent weeks after a strong showing since early February.

Retaining its "overweight" recommendation, investment bank JP Morgan Cazenove said: "Schroders remains a key pick in the sector given its clear business momentum and strong balance sheet."

Schroders' results come as the industry is undergoing a revival with investors returning to high risk assets such as equities and property following the turbulence of the financial crisis during which they fled to the safety of cash and bonds.

Earlier this week, rival Aberdeen (ADN.L) reported a near tripling of pretax profits helped by client inflows of 100 million pounds in the first six months of the year, compared with net withdrawals of 8.5 billion last year, while F&C FCAM.L unveiled its first quarterly inflows in five years.

Schroder had net inflows of 9.7 billion pounds during the quarter, compared with net outflows of 2.1 billions last year.

Institutional clients' net inflows were at 6 billion pounds, while retail client money was 3.3 billion for the quarter.

The group's performance fee was 27.1 million, most of which came from gains in a European property fund.

The strong inflows pushed up funds under management to 167.9 billion pounds compared with 148.4 billion at end-December.

(Editing by David Cowell)

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