Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
Share pick for 2020: Schroders
With assets under management of £444bn, Schroders (SDR) is one of the few UK financial firms able to stand shoulder-to-shoulder with its international peers.
While the UK accounts more than a third of assets under management, two thirds of operating revenue comes from outside the UK making it a truly diversified global business.
In terms of products, equities account for 37% of the total followed by multi-asset investments at 25% and fixed income at 18%.
Admittedly this means that Schroders has suffered net outflows from equities this year, along with the rest of the asset management industry, but these have been balanced by inflows into fixed income, multi-asset products and private assets.
Also the firm’s investment returns have been particularly strong this year, generating £35bn uplift in assets under management in the first half.
As well as its traditional asset management business, Schroders recently partnered with Lloyds (LLOY) to form a wealth management company after being awarded £80bn of the £109bn in pension assets that the bank pulled from its former partner Standard Life Aberdeen (SLA). It is also reaching out to younger investors with its MoneyLens service.
Success isn’t assured, however. Some observers have questioned how effectively Schroders Personal Wealth will be able to compete given that the bigger industry players have many more advisers and are unlikely to allow it to carve out a meaningful slice of the lucrative personal wealth management market.
Schroders Personal Wealth launched with 300 Lloyds advisers, while some of its bigger rivals have up to 10 times that number, although it plans to increase headcount substantially.
In a sign of confidence, earlier this year fund manager Nick Train doubled his holding in Schroders from 5% to 10% making him the second largest shareholder after the founding family.
The holding is a bet on Schroders cracking the US market, where it is ‘not well represented’ according to Train, through distribution deals. Of its assets under management, just 15% are owned by clients domiciled in the US compared with 41% owned by clients based in the UK.
‘Most of the trillion-dollar asset managers are in the US because of the scale of the domestic savings pool. How are they (Schroders) going to get to a trillion dollars? It has probably got something to do with the US,’ says Train.
Important information:
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
Issue contents
Editor's View
Feature
- Top performing funds of 2019
- What were the key themes for small caps in 2019?
- Big companies with big decisions to make in 2020
- All change: an unusual period for FTSE 100 CEOs
- Tracking the performance of the biggest emerging markets
- Emerging markets: Views from the experts
- Is inflation really dead and what can investors do if it isn't?
Great Ideas
- Share pick for 2020: IG Design
- Share pick for 2020: Lloyds Banking
- Share pick for 2020: Redrow
- Our 2019 picks have smashed the market with a 23% return
- Share pick for 2020: Luceco
- Four great funds to buy for 2020
- Share pick for 2020: Kainos
- Share pick for 2020: Begbies Traynor
- Share pick for 2020: Hotel Chocolat
- Share pick for 2020: Centrica
- Shares pick 2020: Wizz Air
- Share pick for 2020: Schroders