Schroders reports dip in client funds in 2022, lower profit

LONDON (Reuters) -British fund manager Schroders reported a slide in its assets under management on Thursday, as market turmoil in 2022 dented the value of its funds and led some investors to pull out of riskier assets.

After seeing a boost in client funds during the COVID-19 pandemic, fund managers experienced a leaner 2022, as the war in Ukraine, soaring inflation and a global markets slump soured investor sentiment.

Analysts at JPMorgan said in a note that Schroders' profit for the second half of the year narrowly missed forecasts, as costs were higher than expected.

Schroders reported total assets under management of 737.5 billion pounds ($884 billion) for the 12 months ended Dec. 31, down 4% from 737.5 billion pounds the prior year.

Schroders reported net outflows of 7.6 billion pounds for the year which it said were driven mainly by market volatility in the fourth quarter. Its operating profit fell 14% to 723 million pounds.

The company said it would pay shareholders a final dividend of 15 pence per share.

Schroders shares fell 2.4% in early trading versus a 0.4% dip in the wider FTSE 100 index.

Schroders was one of several asset managers hit by a rout in government bond markets last year, triggered by political turmoil in Britain.

The company said in October it had lost 20.2 billion pounds in third-quarter assets from the Solutions unit that houses its liability-driven investments (LDI) - products that were badly impacted by a rush for cash by pension funds during the chaos.

However, Schroders said on Thursday that the unit ended the year with net outflows of just 0.2 billion pounds - lower than the previous year - while the arm's assets under management edged up 2% to 210.2 billion pounds.

The unit's total assets are still down 15.5 billion pounds from the 225.7 billion pounds it housed at the end of June 2022.

Rival asset managers have reported mixed annual results over the past week, with some including St James's Place reporting a return to net inflows of client funds, while others including abrdn saw net outflows.

(Reporting by Iain Withers in London and Sinchita Mitra in Bengaluru; editing by Sinead Cruise and Jason Neely)