Rathbones Group Plc
Third quarter trading update
Rathbones Group Plc (“Rathbones”) announces a trading update for the three months ended 30 September 2022.
Paul Stockton, Group Chief Executive of Rathbones, said:
“Despite challenging investment markets Rathbones has delivered a resilient quarter, with annualised discretionary and managed net organic growth of 3.3% and overall group investment performance that compares well against industry benchmarks. Market movements in investment values to 30 September 2022 adversely impacted total FUMA however, which fell 1.7% in the quarter to £57.9 billion against the MSCI PIMFA Private Investor Balanced Index, which fell 3.5% over the same period.
We continue to place a high priority on engaging meaningfully with our clients, both face-to-face and digitally, and are on track to deliver the first phase of our planned InvestCloud and Charles River implementations by the end of 2022. Rathbones is well-positioned to take advantage of the future growth opportunities that can arise both during and after periods of investment market volatility.”
Highlights:
– Total funds under management and administration (‘FUMA’) were £57.9 billion at 30 September (30 June 2022: £58.9 billion, 31 December 2021: £68.2 billion).
– £43.1 billion in the Investment Management business (30 June 2022: £43.8 billion, 31 December 2021: £50.3 billion).
– £10.6 billion in the Rathbone Funds business (30 June 2022: £10.9 billion, 31 December 2021: £13.0 billion).
– £4.2 billion in Saunderson House (30 June 2022: £4.2 billion, 31 December 2021: £4.9 billion).
– Discretionary and managed net inflows were resilient at £0.4 billion (Q3 2021: £0.6 billion) in the quarter to 30 September 2022, representing an annualised growth rate of 3.3% (Q3 2021: 4.8%).
– Discretionary service net inflows totalled £0.3 billion (Q3 2021: £0.5 billion).
– Net inflows into our multi-asset fund range (a central part of our managed offering to the adviser market) were strong, totalling £0.1 billion and equating to annualised net growth for the period of 17.4% (Q3 2021: £0.1 billion).
– Despite continued market volatility and significant outflows across the wider asset management industry, net outflows in our single strategy fund range remained low at £0.1 billion in the quarter (Q3 2021: net inflows of £0.4 billion).
– Saunderson House integration is progressing well, with new propositions launched during the quarter. Net outflows of £0.1 billion (Q3 2021: n/a) were in line with expectations.
– Our digital investment programme is progressing well with planned releases of InvestCloud and Charles River on track for delivery later this year. Functionality within MyRathbones, our digital portal and app, has improved materially in 2022 supporting engagement with both clients and advisers via easy-to-use data sharing, messaging and reporting capabilities.
– Underlying net operating income was £113.0 million for the three months ended 30 September 2022, an increase of 6.2% from the £106.4 million for the three months ended 30 September 2021.
– Investment Management fees totalled £67.5 million (Q3 2021: £72.8 million), reflecting lower FUMA on the principal charging date.
– Commission income totalled £12.1 million, up 12.0% (Q3 2021: £10.8 million) given increased trading volumes amid market volatility.
– Net interest income increased materially, as expected, to £5.6 million from £0.9 million in Q3 2021, reflecting UK base rate rises during the year to date.
– Fees from advisory services and other income increased to £12.4 million (Q3 2021: £4.9 million), reflecting organic growth and the impact of the Saunderson House acquisition.
– Income in Rathbone Funds, which accrues daily, totalled £15.4 million (Q3 2021: £17.0 million).
Full year results 2022
Results for the 12 months to 31 December 2022 will be announced on 1 March 2023.
Detailed financial information
Net operating income:
| 3 months ended 30 September | 9 months ended 30 September | |||||
| 2022 | 2021 | Change | 2022 | 2021 | Change | |
| Investment Management | £m | £m | % | £m | £m | % |
| – Fees | 67.5 | 72.8 | (7.3) | 206.9 | 213.5 | (3.1) |
| – Commissions | 12.1 | 10.8 | 12.0 | 39.0 | 42.0 | (7.1) |
| – Net interest income | 5.6 | 0.9 | 522.2 | 11.6 | 3.3 | 251.5 |
| – Fees from advisory services 1 & other income | 12.4 | 4.9 | 153.1 | 40.3 | 15.5 | 160.0 |
| 97.6 | 89.4 | 9.2 | 297.8 | 274.3 | 8.6 | |
| Rathbone Funds | 15.4 | 17.0 | (9.4) | 47.1 | 45.7 | 3.1 |
| Net operating income | 113.0 | 106.4 | 6.2 | 344.9 | 320.0 | 7.8 |
| MSCI PIMFA Private Investor Balanced Index on principal charging dates 2 | 1606 | 1781 | (9.8) | 1692 | 1754 | (3.5) |
(1) Including income from trust, tax, financial planning services, Vision Independent Financial Planning and Saunderson House.
(2) The principal charging dates for Investment Management clients are 5 April, 30 June, 30 September and 31 December. Rathbone Funds income accrues on daily levels of funds under management.
Funds under management and administration
(i) Breakdown of FUMA and flows by service level
| Q3 ended 30 September 2022 | Opening FUM (£m) | Inflows (£m) | Outflows (£m) | Net Flows (£m) | Service Level Transfers (£m) | Market Movement (£m) | Closing FUM (£m) | Ann Net Growth (%) |
| Discretionary service | 42,989 | 901 | (613) | 288 | (52) | (749) | 42,476 | |
| Bespoke portfolios | 41,745 | 851 | (584) | 267 | (82) | (737) | 41,193 | 2.6 |
| Managed via in-house funds | 1,244 | 50 | (29) | 21 | 30 | (12) | 1,283 | 6.8 |
| Multi-asset funds | 1,931 | 164 | (80) | 84 | – | (42) | 1,973 | 17.4 |
| Total discretionary & managed | 44,920 | 1,065 | (693) | 372 | (52) | (791) | 44,449 | 3.3 |
| Non-discretionary service | 832 | 4 | (29) | (25) | (19) | (24) | 764 | (12.0) |
| Total wealth management | 45,752 | 1,069 | (722) | 347 | (71) | (815) | 45,213 | 3.0 |
| Single-strategy funds | 6,519 | 321 | (433) | (112) | – | (159) | 6,248 | (6.9) |
| Execution only & banking | 2,432 | 31 | (109) | (78) | 71 | (108) | 2,317 | (12.8) |
| Total group (pre acquisitions) | 54,703 | 1,421 | (1,264) | 157 | – | (1,082) | 53,778 | 1.1 |
| Saunderson House | 4,243 | 71 | (161) | (90) | – | (2) | 4,151 | (8.5) |
| Total group | 58,946 | 1,492 | (1,425) | 67 | – | (1,084) | 57,929 | 0.5 |
| 9 months ended 30 September 2022 | Opening FUM (£m) | Inflows (£m) | Outflows (£m) | Net Flows (£m) | Service Level Transfers (£m) | Market Movement (£m) | Closing FUM (£m) | Ann Net Growth (%) |
| Discretionary service | 49,249 | 2,585 | (1,920) | 665 | (158) | (7,280) | 42,476 | |
| Bespoke portfolios | 47,985 | 2,415 | (1,846) | 569 | (252) | (7,109) | 41,193 | 1.6 |
| Managed via in-house funds | 1,264 | 170 | (74) | 96 | 94 | (171) | 1,283 | 10.1 |
| Multi-asset funds | 1,991 | 592 | (287) | 305 | – | (323) | 1,973 | 20.4 |
| Total discretionary & managed | 51,240 | 3,177 | (2,207) | 970 | (158) | (7,603) | 44,449 | 2.5 |
| Non-discretionary service | 1,026 | 14 | (67) | (53) | (77) | (132) | 764 | (6.9) |
| Total wealth management | 52,266 | 3,191 | (2,274) | 917 | (235) | (7,735) | 45,213 | 2.3 |
| Single-strategy funds | 8,316 | 1,308 | (1,621) | (313) | – | (1,755) | 6,248 | (5.0) |
| Execution only & banking | 2,660 | 149 | (340) | (191) | 235 | (387) | 2,317 | (9.6) |
| Total group (pre acquisitions) | 63,242 | 4,648 | (4,235) | 413 | – | (9,877) | 53,778 | 0.9 |
| Saunderson House 3 | 4,917 | 331 | (543) | (212) | – | (554) | 4,151 | (5.7) |
| Total group | 68,159 | 4,979 | (4,778) | 201 | – | (10,431) | 57,929 | 0.4 |
(3) Following a detailed review of Saunderson House flows data, it was identified that Saunderson House net flows previously reported for H1 2022 were overstated by £72m and market performance was understated by £72m. This has now been reflected in the YTD table above.
(ii) Breakdown of Rathbone Investment Management FUMA and flows by channel
| Q3 ended 30 September 2022 | Opening FUM (£m) | Inflows (£m) | Outflows (£m) | Net Flows (£m) | Service Level Transfers (£m) | Market Movement (£m) | Closing FUM (£m) | Ann Net Growth (%) |
| Total direct | 32,814 | 641 | (478) | 163 | (82) | (551) | 32,344 | 2.0 |
| Total financial adviser linked | 10,175 | 260 | (135) | 125 | 30 | (198) | 10,132 | 4.9 |
| Total discretionary service | 42,989 | 901 | (613) | 288 | (52) | (749) | 42,476 | 2.7 |
| Execution only & banking | 2,432 | 31 | (109) | (78) | 71 | (108) | 2,317 | (12.8) |
| Non-discretionary service | 832 | 4 | (29) | (25) | (19) | (24) | 764 | (12.0) |
| Total Investment Management | 46,253 | 936 | (751) | 185 | – | (881) | 45,557 | 1.6 |
| 9 months ended 30 September 2022 | Opening FUM (£m) | Inflows (£m) | Outflows (£m) | Net Flows (£m) | Service Level Transfers (£m) | Market Movement (£m) | Closing FUM (£m) | Ann Net Growth (%) |
| Total direct | 37,800 | 1,739 | (1,483) | 256 | (156) | (5,556) | 32,344 | 0.9 |
| Total financial adviser linked | 11,449 | 846 | (437) | 409 | (2) | (1,724) | 10,132 | 4.8 |
| Total discretionary service | 49,249 | 2,585 | (1,920) | 665 | (158) | (7,280) | 42,476 | 1.8 |
| Execution only & banking | 2,660 | 149 | (340) | (191) | 235 | (387) | 2,317 | (9.6) |
| Non-discretionary service | 1,026 | 14 | (67) | (53) | (77) | (132) | 764 | (6.9) |
| Total Investment Management | 52,935 | 2,748 | (2,327) | 421 | – | (7,799) | 45,557 | 1.1 |
(iii) Total Group FUMA
| At 30 September | At 30 June | ||||
| 2022 | 2021 | Change | 2022 | Change | |
| £m | £m | % | £m | % | |
| Rathbone Investment Management Gross FUMA | 45,557 | 51,335 | (11.3) | 46,253 | (1.5) |
| Of which: discretionary wrapped funds1 | (2,403) | (2,576) | (6.7) | (2,439) | (1.5) |
| 43,154 | 48,759 | (11.5) | 43,814 | (1.5) | |
| Rathbone Funds | 10,624 | 12,143 | (12.5) | 10,888 | (2.4) |
| Saunderson House | 4,151 | – | – | 4,243 | (2.2) |
| Total Group FUMA | 57,929 | 60,902 | (4.9) | 58,945 | (1.7) |
1. Discretionary wrapped funds represent funds operated by Rathbone Funds, managed by both Rathbone Investment Management teams and Rathbone Funds managers
The MSCI PIMFA Private Investor Balanced Index closed at 1597 on 18 October 2022, a decrease of 0.6% since 30 September 2022. Investment Management fee income in the fourth quarter is dependent upon the value of funds under management at 31 December 2022.
19 October 2022