Schroder's assets decrease significantly following a foreign exchange collapse.
Schroders Takes a Nose-Dive in Q1
The money manager, Schroders, took a hard hit in the first quarter of the year. The company fell short of expectations, with assets under management plummeting to £758.4bn, far below the predicted £775bn.
In a trading update, Schroders revealed these eye-popping losses. Investors across the board lost £12.9bn during the quarter, thanks to market performance and unfavorable exchange rates. Every sector within the company saw negative returns.
The majority of these losses came from currency movements, as Schroders reported a £9.4bn decrease in assets under management, including £2.3bn from joint ventures.
Asset management companies in the UK have been reporting staggering losses recently, with market volatility due to US President Donald Trump's tariff regime denting profits.
Losses ranged from £250m for Premier Miton to £702m for Liontrust, and a staggering £2.3bn for Polar Capital.
Schroders also missed the mark on new cash coming into its core business, with investors depositing £1.1bn over the quarter, well below the expected £2.3bn. The wealth management arm and private capital business attracted continued investor interest, but the public markets sector suffered £1.5bn withdrawals.
The most significant miss came from cash coming into Schroders' joint ventures and associates, with analysts anticipating £1.4bn of inflows. Instead, investors pulled £8.5bn during the quarter, mainly due to outflows from money market funds in China.
"In a tumultuous external environment, we are actively managing the areas within our control," said Schroders CEO Richard Oldfield. "By simplifying, scaling, and delivering effectively, we will restore our business to profitable growth."
Potential Factors Affecting Asset Management Losses
- Market Volatility: Uncertainty due to the COVID-19 pandemic led to shifts in investor sentiment and sector rotations, potentially contributing to losses.
- Currency Risks: As Schroders has a global asset base, currency fluctuations could have impacted valuations during periods of GBP volatility.
- Investment Strategy Shifts: Underperformance in thematic funds or sector-specific downturns could have played a role.
- Client Redemptions: Market turbulence often leads to institutional investors rebalancing portfolios, potentially causing outflows.
Though the search results do not directly link the listed factors to Schroders' 2021 performance, these are some of the general challenges impacting asset management during that period. For precise 2021 data, official financial statements or earnings reports from that period would be necessary.
- The decrease in Schroders' assets under management could be linked to unfavorable exchange rates, as reported losses amounted to £12.9bn during the first quarter of the year.
- Similar losses were witnessed in other asset management companies in the UK, with reduced profit margins attributed to market volatility caused by US President Donald Trump's tariff regime.
- As Schroders fell short of expectations for new cash coming into its core business, with investors depositing £1.1bn over the quarter instead of the anticipated £2.3bn, client redemptions might have played a role in these decreased figures.
- Market volatility, uncertainty due to the COVID-19 pandemic, investment strategy shifts, and currency risks could have collectively contributed to the losses experienced by asset management companies, including Schroders, in early 2021.
