Shares in asset manager Schroders (SDR) hit a 2-year high after the firm raised its 2025 profit outlook. Net operating income for the year to December 2025 is now seen at £2.58 billion or more against £2.44 billion in 2024.
The company cited strong net new business, a higher-margin mix of assets, positive returns and higher performance fees. Operating expenses, meanwhile, are seen broadly flat on 2024 as a result of good cost discipline.
Therefore, the firm now expects adjusted operating income of at least £745 million against £603 million the previous year.
| Share price: 450p +8% | P/E: 18.4x |
| Market Cap: £7bn | Yield: 5.2% |
GROWTH IN ASSETS
Total AUM or assets under management are expected to reach £825 billion, up from £779 billion previously. This is thanks to market growth, positive performance and, importantly, positive net new business.
In public markets, ‘significantly improved’ flows resulted in net new business of £4 billion. Schroder Capital generated net new business of £4.5 billion, while it aims to garner £20 billion by 2027. Meanwhile, wealth management saw £3.4 billion of net new business, largely from UK private clients.
Despite being a high-quality business, asset management is sometimes viewed as the ‘poor relation’ of the financial sector. Several high-profile investors, including Sir Chris Hohn, actively avoid the stocks due to concerns over competition and fee compression.
Like many asset managers, Schroders has had a tough few years in terms of its share price. However, 2025 seems to have marked a turning point for the sector with net outflows abating and net inflows re-commencing.
Schroders has a 3-year target to raise £20 billion in net new business, which is punchy but doable. With the shares topping their 2025 and 2024 highs today, it feels like investors are finally getting back on board.
Read the press release here: https://www.schroders.com/en/global/individual/investors/
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