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Investment performance underpins quarterly growth for Brooks Macdonald

By Josh White

Date: Wednesday 17 Apr 2024

Investment performance underpins quarterly growth for Brooks Macdonald

(Sharecast News) - Brooks Macdonald updated the market on its funds under management on Wednesday, reported a closing figure of £17.9bn at the end of March, marking a 2% increase from 31 December.
The AIM-traded firm said that during the quarter, it experienced robust gross inflows of £0.5bn.

However, gross outflows were elevated, reaching £0.8bn, which the board put down to prevailing macroeconomic factors such as high interest rates and inflation.

That resulted in net outflows of £0.3bn, or 1.7%.

Nonetheless, a positive investment performance of £0.6bn, or 3.7%, mitigated the impact of outflows and contributed to the overall increase in funds under management.

The company noted the expansion of Platform MPS during the quarter, including BM Investment Solutions, which grew to £4.2bn with net new business accounting for 1.7% of opening funds under management.

On the other hand, Brooks Macdonald experienced net outflows in its BPS segment, amounting to £0.2bn or 2.3%, as clients withdrew funds for debt repayment or held higher cash balances due to prevailing interest rates.

Within the UK BPS segment, the Decumulation specialised product saw significant growth of 9% during the quarter.

The board said the product offers a solution to meet income requirements while protecting portfolios from early withdrawal downturns.

Despite slightly underperforming the benchmark, investment performance for the quarter stood at 3.7%, primarily due to a higher allocation to bonds, which underperformed equities in the period.

Looking ahead, Brooks Macdonald anticipated its underlying profit for the year to align with market expectations.

The group said it was aiming to continue realising cost benefits from organisational changes announced in October, while maintaining a focus on operational excellence.

However, despite positive demand for products and services, particularly in specialised BPS products and Platform MPS, the group said it expected net outflows for the full year due to ongoing market trends and client behaviour.

The strategic review of its International operations was meanwhile progressing, with outcomes expected to be communicated later in the year.

"Today we report that funds under management increased to £17.9bn over the course of the quarter, as markets responded to the improving macroeconomic outlook," said chief executive officer Andrew Shepherd.

"We have also seen encouraging flows in our Platform MPS and specialist BPS propositions demonstrating continued demand for our broad product range."

However, Shepherd noted that interest rates were still high, placing continuing pressure on clients, with the company focussed on meeting their needs through its solutions and client service.

"I remain confident in our future opportunity."

At 0820 BST, shares in Brooks Macdonald Group were up 0.41% at 1,835p.

Reporting by Josh White for Sharecast.com.

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