Brooks Macdonald in 'strong position' despite below-benchmark performance

Brooks Macdonald Group reported growth in funds under management in the last three months to £17.3bn on Thursday, with net flows rising 55% to an annualised rate of 4.7%.

The AIM-traded firm said total group funds under management stood at £17.3bn on 31 December, up from £16.8bn on 30 September and £16.5bn on 20 June.

That made for an overall increase of 3.1% over the quarter, and 5.3% over the half-year.

It put that performance down to “increasingly positive” net flows, in line with its previous guidance, as well as positive investment performance.

Brooks Macdonald reported “increasingly positive” net flows at the group level, with annualised net flows at 4.7% for the quarter, up from 3.1% for the first quarter, and swinging from a negative -2% for the 2021 financial year.

Net flows in UKIM discretionary, excluding funds, came in at £0.2bn or 1.7%, with both BPS and MPS continuing in positive territory.

The company said outflows were declining in funds, with the Defensive Capital Fund flat on organic flows.

Brooks Macdonald also described “continued progress” in its international operations, returning to positive net flows, as it previously guided.

The board said investment performance remained positive, although it was behind the benchmark index for the quarter.

It said it remained confident that client portfolios were “well-positioned” for the medium and longer term.

Looking ahead, Brooks Macdonald said it had a “healthy” pipeline, and expected continuing positive net flows in line with its guidance.

Underlying profit and underlying profit margins were running ahead of the same period last year, and in line with expectations.

Reflecting its view that client portfolios were well positioned, the board said the company maintained a “relatively stable” asset allocation, resulting in lower-than-expected transaction-related revenues for the first half.

That, it added, was offset by continued strong cost discipline.

The group also reported progress in its digital transformation, launching the planned new digital client onboarding solution in the quarter.

It said the transition of all client- and intermediary-facing processes to SS&C's platform was ongoing, and would be completed after “comprehensive” testing.

“This has been a strong half for Brooks Macdonald, reflective of the momentum we see across the group,” said chief executive officer Andrew Shepherd.

“It is especially pleasing to see our international business return to positive net flows, with our new Isle of Man office also coming on stream to support future growth.

“We have a growing pipeline of new business, our highly talented people are continuing to work hard to improve and develop our service to clients and intermediaries, and we are in a strong position to take advantage of the great opportunities ahead for Brooks Macdonald.”

At 1218 GMT, shares in Brooks Macdonald were flat at 2,650p.