Exane BNP downgrades Schroders to 'neutral'

8th Apr 2016 10:03

(ShareCast News) - Exane BNP Paribas downgraded Schroders to 'neutral' from 'outperform' and cut the price target 10% to 2,700p as it took a look at asset managers.While it remains positive on the long-term investment case for Schroders, Exane said its weak flow and fund performance momentum, lack of near term operating leverage and the lower likelihood of a change in capital return policy have led it to downgrade.Exane said its long-term positive stance was based on diversity across asset classes, clients and geographies; Schroders' exposure to multi-asset and wealth management and a strong pipeline of new funds/seeding."Nonetheless we see Schroders' diversity posing some short-term challenges, in particular for the £72bn of AUM coming from Asia-Pacific clients (split roughly equally between intermediary and institutional, though this includes AUM from Japan and Australia), given the market backdrop."The French bank noted the region accounted for around 75% of group net flows in the first half of 2015."Schroders' relative fund performance has deteriorated over the past six months, leading us to see the risk/reward on the stock as balanced."At 1008 BST, Schroders shares were down 1% to 2,498p.