Schroders Sees ‘Uneasy Calm’ in Markets Amid Selloff Risk

Jul 31, 2014 12:18 pm ET

(Updates with closing share price in sixth paragraph )

July 31 (Bloomberg) -- Schroders Plc Chief Executive Officer Michael Dobson said he sees room for a market selloff as the U.K.’s biggest publicly traded money manager reported 4.8 billion pounds ($8.1 billion) of net inflows.

The company said assets under management increased 15 percent to a record 271.5 billion pounds in the first half, according to the statement. That missed some analysts’ forecasts including at Credit Suisse Group AG, pushing the shares down the most in almost five months.

“There is a sort of uneasy calm in the market,” Dobson said in a telephone interview from London. “Given where financial markets have come from there is scope for a pullback. Everyone is little bit unsure about how it’s going to play out and retail investors are susceptible to that.”

Dobson’s comments echo those of former Federal Reserve Chairman Alan Greenspan, who yesterday said that the market will see a “significant correction.” Pacific Investment Management Co.’s Bill Gross said investors should say “good evening” to the prospect of future capital gains in asset classes as interest rates start to rise.

Dobson said market uncertainty had helped bring inflows into the firm’s multi asset business, which has grown to 57 billion pounds. The funds saw 2.2 billion pounds of net flows from institutional clients and 1.9 billion pounds from individual investors during the first half, he said.

‘More Challenging’

The stock closed down 4.4 percent at 2,390 pence, the biggest decline since March 3. Competitors Aberdeen Asset Management Plc and Jupiter Fund Management Plc also sold off this week after their earnings fell short of estimates.

Schroders’s “net inflows at 4.8 billion pounds were about 20 percent weaker than consensus,” Tom Mills, an analyst at Credit Suisse, wrote in a report to clients. It implies “a more challenging retail-flow environment in Q2.”

Dobson said the money manager had continued to see “good inflows” in July and that it had a “significant” pipeline of business from institutional clients that had yet to be funded.

The company increased pretax profit 5.5 percent to 233.9 million pounds in the first half after being affected by an 18 million-pound loss from the currency’s strength. It still raised its interim dividend by 50 percent to 24 pence a share.