Brooks Macdonald Group plc (“Brooks Macdonald” or the “Group”) today publishes its Trading Update for its half year ended 31 December 2019, together with an update on discretionary Funds under Management (“FUM”) for the second quarter.
Revenue, underlying profit and underlying profit margin are all ahead of the same period last year and in line with expectations.
Total FUM remained stable over the half year ending the period at £13.1 billion (30 June 2019: £13.1 billion). During the quarter ended 31 December 2019, total FUM decreased by 1.5% (30 September 2019: £13.3 billion).
UKIM discretionary FUM, comprising our BPS and MPS services, grew by 1.3% during the first half driven by continued strong investment performance ahead of the MSCI WMA Private Investor Balanced Index. Net flows in this part of the business were broadly in line with expectations, given softer client sentiment in the light of the political and macroeconomic backdrop, and the Group’s focus on efficiency and business quality.
Within Funds, our Defensive Capital Fund continued to perform well, with FUM reaching the milestone of £700 million, growing by 6.6% during the first half and 2.0% during the quarter.
During the second quarter, the Group’s investment management agreement for the Grosvenor Wealth Management funds was terminated. This accounted for £244 million of FUM corresponding to annualised revenues of circa £0.6 million. This followed extensive discussions between Brooks Macdonald and Grosvenor over the purchase of the sponsorship company attached to the Grosvenor funds, where we were unable to reach a satisfactory commercial arrangement that met our stated acquisition criteria.
International FUM performed in line with expectations ending the first half up by 1.8%, demonstrating the continuing reinvigoration of the business.
Caroline Connellan, Chief Executive of Brooks Macdonald commented:
“It has been a positive six months for Brooks Macdonald. Over the first half of our financial year we maintained FUM levels, delivered strong investment performance, and made good progress in our International business. We continue to deliver on our commitment to improve profit margins over the medium term, and the recently announced acquisition of Cornelian represents a significant step forward in our strategy of delivering sustainable value-enhancing growth.
“While the recent UK election has removed some uncertainty, the broader macroeconomic and political backdrop makes it prudent to remain somewhat cautious about the short-term outlook for flows. We remain optimistic about the opportunities for Brooks Macdonald and, given our continued investment in talent, focus on delivering for clients and advisers, and ongoing cost discipline, our expectations for full year profit remain unchanged.”