17th Oct 2019 08:40
(Alliance News) - Rathbone Brothers PLC on Thursday posted modest growth in managed assets amid difficult markets, and said that it intends to make investments in the business over the next two to three years to enhance organic growth.
The wealth manager added that, as a result of new investments, the company is targeting to operate closer to a mid-20s underlying operating margin to create long term growth opportunities, improve client services and deliver productivity gains. In 2018, underlying operating margin stood at 29.4%.
Rathbone shares were down 6.5% at 2,225.00 pence each, one of the worst performers in London's FTSE 250 index on Thursday morning.
The company's total funds under management & administration increased 4.4% to GBP49.4 billion at September 30 from GBP47.3 billion a year ago. The core Investment Management business saw assets rise year-on-year to GBP42.4 billion from GBP41.3 billion, while the Unit Trusts business assets totalled GBP7.0 billion versus GBP6.0 billion.
In comparison, the FTSE 100 index in the three months to September-end decline 1.4% from the equivalent date last year, whilst the MSCI WMA Private Investor Balanced index increased 2.0%, Rathbone said.
Rathbone saw total net fund inflows of GBP100 million in the third quarter, versus GBP7.0 billion, largely due to the acquisition of Speirs & Jeffrey.
In Investment Management business, the company saw flat year-on-year organic inflows of GBP800 million amid a difficult market for savings. Net outflows at the unit stood at GBP200 million versus GBP6.9 billion, largely due to Speirs & Jeffrey deal.
"This reflected ongoing weak investor sentiment and investment manager departures. Both factors, together with anticipated outflows from short term discretionary mandates, are expected to continue to weigh on net growth in funds under management & administration into 2020," Rathbone said.
Rathbone acquired Speirs & Jeffrey in the summer of 2018, for an initial consideration of GBP104 million, adding GBP6.7 billion in funds.
In Unit Trusts business, net inflows for the quarter remained strong at GBP300 million versus GBP100 million, despite a difficult environment for asset managers.
The company's third quarter underlying operating income totalled GBP86.3 million, up 7.5% from the GBP80.3 million a year ago. Income in Investment Management increased 8.3% to GBP76.7 million. The Unit Trusts business saw flat income at GBP9.6 million.
By Tapan Panchal; [email protected]
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