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Funds News

St James's Place eyes new clients as profit falls

LONDON (Reuters) - Wealth management firm St James’s Place said it would broaden its investment range and style to attract new clients after posting a fall in first-half operating profits on Wednesday.

Chief Executive David Bellamy said St James's Place SJP.L was seeking to attract a new breed of clients and was planning to offer absolute return and fixed-income funds for investors keen on capital preservation. The new funds and strategy is expected to be in place within the next 12 months.

“You are looking at a managing style, which is more about the short term, I guess, and more about taking advantage of the short term,” he told Reuters.

St James's, which is 60 percent owned by Lloyds Banking Group LLOY.L, posted an operating profit of 101 million pounds, down from 114.2 million a year earlier, but ahead of a market consensus of 98.1 million pounds provided by the company.

At 10:43 a.m., St James’s Place shares were down 5.47 percent lower at 177.25 pence.

Analysts at Noble reiterated a “buy” rating on the stock, saying it was “based on its fundamental qualities and a stable balance sheet.”

However, they warned that revenue and earnings depended on the equity markets.

“Hence while massive upside (is) likely over the medium term, it might not emerge in the short term,” the analysts said.

St James’s CEO Bellamy said there was no indication of any change in the stake held by Lloyds, as the parent group seeks a deal for one of its larger investment management business, Insight.

“They are embroiled in their own business right now and we are just getting on with SJP (St James’s Place). Nothing new,” he said.

TOUGH CLIMATE

“In the short term we continue to see a difficult economic climate for all wealth-management businesses,” Bellamy said in a statement.

New business for the half year, calculated by adding new regular premiums to a tenth of new single premiums, was 203 million pounds, compared with an analyst consensus of 205.7 million pounds provided by the company and 220.7 million pounds posted in the same period last year.

Net inflows grew by 25 percent to 1 billion pounds, helping to counter the impact of weak markets in the last 12 months and bring assets under management to 16.9 billion pounds, against 17.2 billion a year earlier.

The manager said it had retained over 95 percent of existing clients’ funds.

As well as planning new funds, the firm has overhauled the management of some of its products to move to a more specialist investment style.

It has brought in John Wood of JO Hambro Capital Management and Peg McGetrick of Liberty Square Asset Management to manage the UK and General Unit Trust, while Stuart Mitchell of SVM Capital and Kenneth Broekaert of Burgundy Asset Management will manage the Greater European Unit Trust.

They take over from boutique THS Partners, which Bellamy said still retained a “major part” of globally-managed funds.

The interim dividend was kept at 1.84 pence.

(For the Hedge Hub blog, visit: blogs.reuters.com/hedgehub/ For the Global Investing blog, visit: here)

Editing by Joel Dimmock and Karen Foster

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