Schroders (SDR) Q3 2024 TU earnings summary

Executive summary

• Assets under management (AUM) reached a record £777.4bn as of 30 September 2024, with positive net flows in core segments despite FX headwinds and market volatility.

• CEO transition underway, with a new executive committee and board appointments focused on simplification, commercial discipline, growth, and operational efficiency.

• Strategic priorities include cost discipline, talent retention, and accelerating growth in high-potential areas.

Financial highlights

• AUM excluding JVs and associates grew to £663.8bn, supported by positive flows and investment performance.

• Currency movements reduced AUM by £13.4bn (excluding JVs and associates) and £17.0bn for the Group total.

• Net flows in JVs and associates were £5.2bn positive year-to-date but turned negative in Q3 due to China market volatility.

• Mutual funds saw strong fixed income inflows and easing equity outflows, especially in emerging markets and US equities.

• Institutional flows were stable, with some notified losses of £2bn expected in Q4.

• Solutions segment faces a low-margin outflow of £8bn from the Scottish Widows mandate in Q4.

• Private markets net flows slowed, with fundraising challenges in real estate and positive flows offset by FX movements.

• Wealth management net flows were strongest in advised business, with outflows in managed business due to a single client insourcing.

Outlook and guidance

• Focus in Q4 on beating last year's net new business of £4.5bn, despite accelerated outflows.

• Notified outflows of £8bn from Scottish Widows and £2bn from institutional clients are expected in Q4 2024.

• The group remains on track for 5%-7% net new business growth of opening AUM per annum.

• Non-compensation cost guidance for the year reaffirmed at £665m.

• Compensation to revenue ratio guidance maintained at 46%.

• Performance fees expected to be closer to £50m for the year, down from earlier £75m guidance.