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£1.5bn on way out of Schroders

Heather Tomlinson
Sunday 01 September 2002 00:00 BST
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Schroders, the fund management company, is expected to announce a £1.5bn exodus of its funds from institutional investors when it reports half-year results on Tuesday.

UBS Warburg analyst Sarah Ing believes the company will be saved by a contrasting increase in funds from private and retail banking clients, to form a net outflow of £200m.

The Independent on Sunday has learned that several large institutional clients are leaving the company. Schroders is understood to have lost its share of the management of £630m of pension funds owned by Wiltshire County Council.

Greenwich Borough Council is putting the management of its £480m pension funds, currently managed by Schroders and Deutsche Bank, out to tender.

TD Asset Management, a Canadian company, has brought management of its "Balanced Fund", previously handled by Schroders, in-house. Worcestershire County Council is believed to be reviewing the management of its £770m funds, now managed by Schroders and Gartmore Investment Management.

The outflow would not be as bad as in the previous year, when £6bn of funds were lost, mainlyfrom institutional clients. One analyst said balanced portfolios, with mixtures of equities and bonds, are moving out of favour, to be replaced by more specialist funds. Schroders is seen as a balanced operator.

Warburg forecaststhat Schroders' half-year profits will fall to £25m from £47m in the same period last year. It predicts that funds under management will fall to £99bn from £110bn.

Schroders is also likely to reveal more cost-cutting moves. Although Ms Ing believes it will experience an inflow of funds from retail and private banking clients, retail sales have been flat this year.

The Investment Management Association says retail fund sales fell 4 per cent to £16.1bn in the first half, and institutional fund sales 18 per cent to £9.3bn in the first half, compared to last year's period.

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