Schroders Has Strategies in Place to Deal With Margin Pressure

Margin pressure: two words that sum up the challenge and the investment case for Schroders. Like most of its U.K. peers, Schroders has seen a material decline in its management fee margin. To halt this decline, Schroders has laid out a strategy that hits all the right notes. It will focus its resources on higher-margin asset classes, increasing ownership of client relationships, and on investing heavily in technology to compete in a digital world. The proof will be in execution. While client flows for Schroders generally remain above industry levels, it does seem that they have not yet been successful in halting the slide in margins. This is at least the case for the consolidated margin; part of the decline in margin is due to a shift in business mix to lower-margin asset classes. However, within product/asset classes, margins remain under pressure.