Macro uncertainties lead to net outflows for Brooks Macdonald

17th Jan 2024 14:12

(Sharecast News) - Brooks Macdonald said in an update on Wednesday that it saw robust gross inflows of £0.6bn in the December quarter, marking a 1.5% increase from the prior quarter and equating to an annualised rate of 14%.

The AIM-traded firm said gross outflows were notably high, however, reaching £0.7bn for the three month period, with particular emphasis on the BPS and Funds sectors.

It put the elevated outflows down to the prevailing market volatility and the impact of higher interest rates on client behaviour.

As a result, the quarter ended with overall net outflows of £0.1bn, or 0.6% of total funds.

The company said the net outflows were partially offset by positive investment performance, which achieved a 4.9% increase during the quarter.

That performance led to a 4.3% growth in the group's closing funds under management (FUM), bringing it to a total of £17.6bn as of 31 December, compared to £16.9bn on 30 September.

Brooks Macdonald's funds under management or advice (FUMA) with private clients directly dealing with the group amounted to £5.2bn as of the end of December.

Out of that total, £4.4bn was related to portfolios within the group's investment management, while £0.8bn was attributed to portfolios managed by third-party investment managers.

Looking ahead, Brooks Macdonald expected continued momentum in gross inflows across its product range during the second half of the year.

The level of gross outflows and the resulting net flows for the full year would depend in part on macroeconomic factors, the board explained.

Following the organisational changes made in October, the group said it expected its full-year underlying profit and underlying profit margin to align with market expectations.

"I am pleased to report growth of 4.3% in the group's funds under management for the first half of the financial year," said chief executive officer Andrew Shepherd.

"This result is a testament to the expertise and hard work of our people who are committed to delivering on our purpose to 'realise ambitions and secure futures' for all our stakeholders.

"During a challenging period for both the economy and financial markets, we continued to see healthy demand across our range of products and services, with £0.6bn of gross inflows during the second quarter."

Shepherd said that included 44.7% organic growth from the firm's recently launched and fast-growing gilt portfolio service.

"These results reflect our capabilities as a Group to deliver what people value - the guidance and reassurance of trusted advice and robust long-term investment management.

"Given those capabilities and the opportunities we can see ahead, I remain confident in our ability to deliver on the group's ambitious growth strategy."

At 1300 GMT, shares in Brooks Macdonald Group were down 4.75% at 1,805p.

Reporting by Josh White for Sharecast.com.