Schroders Earnings: Growth in AUM Despite Industry Headwinds

Narrow-moat Schroders increased its fee-generating assets under management, or AUM, by 4% year on year to GBP 751 billion by the end of 2023 supported by reasonable net new inflows of GBP 10 billion. Considering the challenging market conditions, this is an acceptable outcome. Flows remained the strongest in Schroders’ targeted growth areas of wealth management and private equity/alternatives. Schroders enjoyed another strong year in its private equity operation with inflows of around GBP 5 billion in 2023, equal to 7% of the segment starting AUM. The traditional active equity and fixed-income portfolios continue to suffer from net client withdrawals. Schroders managed to maintain its fee margins in the asset management business at 35 basis points, defying industry pressure. Executing its strategy of focusing on higher-margin assets, Schroders redeemed low-margin institutional mandates within its asset management business, which offset margin contraction in other areas. Wealth management margins improved in 2023 compared with 2022, reaching 41 basis points as this business segment is less dependent on market values.