Morgan Stanley European Banks and Financials conference Schroders plc Vice Chairman

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Morgan Stanley European Banks and
Financials conference
Schroders plc
Vice Chairman
Massimo Tosato
2 April 2008
trusted heritage
advanced thinking
Asset management – a changing landscape
– Growth of individual and ‘instividual’ savings
Channels
– Decumulating investors outgrowing accumulating investors
Demographic development
Percentage of population, Europe
40
Accumulating (40- 59)
30
20
Decumulating (60+)
10
0
2000
Source: Mckinsey
1
2020
2040
Asset management – a changing landscape
– Increasing demand for investment solutions
Products
– Outcome oriented products
– The rise of alternatives
– The rise of Asia and other emerging markets
Markets
– Sovereign Wealth Funds
– Growth opportunities beyond domestic client base
Business model
2
– Change in distribution dynamics
Increasing demand for investment solutions
Retail: high growth of outcome-orientated funds
US Market, 2006 ($mn)*
Risk-based
life cycle
23
Target-date
life cycle
65
Tax
managed
33
Inflation
indexed
65
Principal
protected
11
Source: Mckinsey
3
CAGR% 04-06
Pre-retirement
Investment solutions and outcome orientated
products
Post-retirement
Income, absolute return, capital preservation
The rise of alternatives
Schroders Alternative clients conference
March 2008
Investors expecting to increase their allocation
in alternatives over the next 3 years*
•
86% increased their weighting in
alternatives in 2007
Hedge funds
•
66% plan to increase their alternatives
weighting in 2008
PwC/EIU survey – ‘Transparency vs
Returns’* March 2008
4
•
Higher alternative allocations expected
•
Growing focus on governance, quality &
scope of reporting
33
40
Private equity
41
Property
Infrastructure
35
Commodities
35
Product convergence
Global product development continuum
Market tracking
Innovative products
Structured products
Above
Average
Growth
ETF
Private Equity
Real Estate
Index funds
Hedge funds
Quantitative
Below
average
growth
Active equities
Active bonds
Money market
‘Traditional’ products
Revenue margin
Source: Putnam Lovell, TABB Group estimate
5
Value chain convergence
Manufacturing
Packaging/design
Distribution
Future battleground or partnership?
Strategic advice, insurance, risk management,
provision of beta, etc.
6
End client
Schroders: a Company in motion
Strength of international business
A Company in motion
• £139.1 billion total funds under management
• Income diversified by channel: 51% retail, 37% institutional and 12% PB
• Income diversified by geography:
UK
£52.7bn
70% of total income outside the UK
37 offices in 28 countries
Continental
Europe
£29.8bn
Investment operations in 16 locations
4 in Americas
5 in Europe
North
America
£13.8bn
South
America
£3.4bn
7 in Asia
£3.8bn China joint venture
2007 funds under management: Investment by client domicile
China joint venture funds under management are not reported within Group funds under management
8
Middle
East
£3.4bn
Asia
Pacific
£36.0bn
Increasing capabilities in alternatives
A Company in motion
• Property
Alternative FUM £15.9bn – December 2007
0.9
• Hedge funds of funds
1.7
• Commodities & Agriculture
• Private Equity
• Multi-manager
2.2
8.8
2.3
property
funds of hedge funds
private equity funds of funds
9
emerging market debt
commodities
Schroders
A Company in motion
Record results in 2007
£mn
•
Strength of international business
1200
•
Diversity of product range
•
400
1000
300
800
392.5
Focus on high margin products
600
•
200
Growth in Retail
400
•
Repositioning in Institutional
•
Transformed profitability in Private Banking
290.0
230.3
200
0
0
2005
Income (lhs)
10
100
2006
Costs (lhs)
2007
PBT (£mn)
Forward-Looking Statements
These presentation slides contain certain forward-looking statements and forecasts
with respect to the financial condition and results of the businesses of Schroders plc
These statements and forecasts involve risk and uncertainty because they relate to
events and depend upon circumstances that may occur in the future
There are a number of factors that could cause actual results or developments to differ
materially from those expressed or implied by those forward-looking statements and
forecasts. Nothing in this presentation should be construed as a profit forecast
11
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