Fund firm Schroders profit hurt by writedowns

By Laurence Fletcher

LONDON (Reuters) - First-half pretax profit at Schroders fell by 27 percent, hurt by writedowns and client outflows, and the fund firm warned that demand from retail investors would weaken.

The company, which announced the mark-to-market writedowns in April, said on Friday assets under management fell to 130.2 billion pounds from 139.1 billion pounds at the end of last year.

"We expect retail investor demand for mutual funds to be increasingly affected by the volatility of financial markets. This will have a negative impact on revenues in our retail business," the firm said.

Pretax profit came in at 135.7 million pounds, down from 185.6 million pounds a year ago.

The firm, which traces its roots back more than 200 years, saw a total of 1.1 billion pounds of net outflows, largely in its institutional business, while retail funds saw 200 million pounds of outflows.

In April Schroders said it had taken an unrealised mark-to-market writedown of 25.8 million pounds on U.S. mortgage and asset-backed securities in the first quarter.

It also announced a 7.7 million-pound writedown on seed capital invested in new funds at the time.

Profit from private equity dropped to 7.4 million pounds from 36.2 million pounds a year ago due to unfavourable market conditions, the company said.