Morgan Stanley European Banks and Financials conference...4 Schroders Alternative clients conference...
Transcript of Morgan Stanley European Banks and Financials conference...4 Schroders Alternative clients conference...
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Morgan Stanley European Banks and
Financials conference
Schroders plc
Vice Chairman
Massimo Tosato
2 April 2008
trusted heritage
advanced thinking
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Asset management – a changing landscape
– Growth of individual and ‘instividual’ savings
– Decumulating investors outgrowing accumulating investors
Channels
0
10
20
30
40
2000 2020 2040
Accumulating (40- 59)
Decumulating (60+)
Demographic development
Percentage of population, Europe
Source: Mckinsey
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Asset management – a changing landscape
– Increasing demand for investment solutions
– Outcome oriented products
– The rise of alternatives
– The rise of Asia and other emerging markets
– Sovereign Wealth Funds
Markets
Products
– Growth opportunities beyond domestic client base
– Change in distribution dynamics
Business model
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Increasing demand for investment solutions Retail: high growth of outcome-orientated funds
Pre-retirement
Investment solutions and outcome orientated products
Post-retirement
Income, absolute return, capital preservation
Principal
protected
Inflation
indexed
Tax
managed
Target-date
life cycle
Risk-based
life cycle
US Market, 2006 ($mn)*
23
65
33
65
11
CAGR% 04-06
Source: Mckinsey
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Schroders Alternative clients conference
March 2008
• 86% increased their weighting in
alternatives in 2007
• 66% plan to increase their alternatives
weighting in 2008
PwC/EIU survey – ‘Transparency vs
Returns’* March 2008
• Higher alternative allocations expected
• Growing focus on governance, quality &
scope of reporting
The rise of alternatives
35
35
41
40
33
Commodities
Infrastructure
Property
Private equity
Hedge funds
Investors expecting to increase their allocation in alternatives over the next 3 years*
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Product convergence Global product development continuum
Above Average Growth
Below average growth
Revenue margin
Active equities
Active bonds
Money market
Index funds
ETF
Market tracking
‘Traditional’ products
Real Estate
Quantitative
Hedge funds
Private Equity
Innovative products Structured products
Source: Putnam Lovell, TABB Group estimate
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Value chain convergence
End client Distribution Manufacturing
Packaging/design
Future battleground or partnership?
Strategic advice, insurance, risk management, provision of beta, etc.
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Schroders: a Company in motion
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2007 funds under management: Investment by client domicile
China joint venture funds under management are not reported within Group funds under management
£3.8bn China joint venture
North
America
£13.8bn
South
America
£3.4bn
Continental
Europe
£29.8bn
UK
£52.7bn
Asia
Pacific
£36.0bn
Middle
East
£3.4bn
• £139.1 billion total funds under management
• Income diversified by channel: 51% retail, 37% institutional and 12% PB
• Income diversified by geography:
70% of total income outside the UK
37 offices in 28 countries
Investment operations in 16 locations
4 in Americas
5 in Europe
7 in Asia
Strength of international business A Company in motion
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8.8
2.3
2.2
1.7
0.9
property emerging market debt
funds of hedge funds commodities
private equity funds of funds
Increasing capabilities in alternatives A Company in motion
Alternative FUM £15.9bn – December 2007 • Property
• Hedge funds of funds
• Commodities & Agriculture
• Private Equity
• Multi-manager
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Schroders A Company in motion
Record results in 2007
• Strength of international business
• Diversity of product range
• Focus on high margin products
• Growth in Retail
• Repositioning in Institutional
• Transformed profitability in Private Banking
392.5
230.3
290.0
0
200
400
600
800
1000
1200
2005 2006 2007
0
100
200
300
400
Income (lhs)
£mn
PBT (£mn) Costs (lhs)
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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