30th Apr 2020 09:48
(Alliance News) - St James's Place PLC on Thursday reported a drop in funds under management over the first quarter as its investment performance took a beating from Covid-19 sell-offs.
Shares in the FTSE 100-listed wealth manager were down 4.7% in London on Thursday morning at 860.00 pence.
At March 31, St James's Place recorded GBP101.67 billion in funds under management, down 1.8% from GBP103.52 billion at the same point a year before. From the end of 2019, managed funds are down 13% from GBP116.99 billion.
During the first quarter, St James's Place recorded a net investment return of negative GBP17.69 billion - with all three asset classes suffering.
Investment funds saw GBP4.23 billion wiped off from its market performance, while Pension funds lost GBP8.11 billion and UT/ISA & DFM losing GBP5.35 billion.
Despite the dramatic investment performance, the fund manager was able to record GBP2.37 billion in net inflows - with Pension funds capturing GBP1.56 billion in net inflows.
St James's Place said net flows in April were "robust", but below the same month last year.
Chief Executive Andrew Croft said: "At the time of our full-year results announcement, I commented that improved investor sentiment, following the UK general election outcome, had driven an increase in activity across the business. This in turn has translated into first quarter gross inflows increasing 12% to GBP4.04 billion. With retention remaining very strong, net inflows for the period were up, representing annualised growth of 8.1% on opening funds under management."
He continued: "With the escalation of the COVID-19 crisis during March there was a sharp decline in global markets and this negatively impacted our funds under management. Given the nature of our unit-linked business model, where we match client liabilities with corresponding assets, our balance sheet is largely protected from these steep market declines and therefore our solvency position remains strong."
St James's Place noted its March 31 its net asset value, on the European Embedded Value basis, was about 1,170 pence.
The wealth manager added: "Our business is resilient, but we are not immune to how the unprecedented level of uncertainty may impact the operating environment for the business and our clients for the foreseeable future."
As a result, St James's Place is withholding one-third, or 11.22p, from its 2019 final dividend.
"This prudent judgement will ensure we are able to deal with such scenarios and protect clients, the long-term value of the business, and our proven ability to benefit from the growth opportunity that will undoubtedly emerge on the other side of this crisis," St James's Place said.
In order to enact this, the wealth manager has declared a second interim divided for 2019 of 20.0p - equivalent to around two-thirds of the previously proposed final dividend, and is withdrawing its recommendation to pay a final dividend.
Going forward, the wealth manager said it will only pay one dividend for 2020, and the decision will be made in February 2021.
2020, Croft said, is shaping up to be "another challenging year".
He added: "We have seen from past crises that if we look after our clients, advisers and employees, as well as our wider community, we will be rewarded in the future with increased goodwill, loyalty and retention.
"Looking ahead, the fundamental financial planning requirements of individuals remain considerable with the need for trusted financial advice continuing to increase, arguably even faster now given the uncertainty that prevails. At the same time, the availability of high-quality professional financial advice continues to be limited. The strength and resilience of our business model means we are well-positioned to meet the challenges ahead and take advantage of the opportunities for continued growth over the medium term."
By Paul McGowan; [email protected]
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