Brewin Dolphin Q1 funds drop amid falling markets

Wealth manager Brewin Dolphin reported a drop in total first-quarter funds on Wednesday as markets fell and client activity slowed.

In an update for the first quarter of the financial year ending 30 September 2019, the group noted that the MSCI Private Investor Balanced Index fell 7.9% and the FTSE 100 declined 10.4%. Against this backdrop, total funds at Brewin slid 7.7% to £39.5bn, while discretionary funds were down 7.2% to £34.9bn, driven by lower market levels.

Discretionary net flows were £0.5bn compared to £0.7bn in the first quarter of 2018, in line with the previous quarter and representing an annualised growth rate of 5.3%, ahead of Brewin's 5% annual target.

Meanwhile, total income fell 1.6% to £77.7m and core income was down 0.8% to £75.6m. Non-core income during the quarter was 25% lower at £2.1m.

Chief executive David Nicol said: "The first quarter has been characterised by lower market levels and ongoing macro-economic uncertainty. Against this backdrop, net discretionary inflows have remained strong and ahead of our 5% target, albeit intermediary client activity has slowed whilst intermediaries and their clients assess the current environment.

"Challenging market conditions reinforce the value Brewin Dolphin offers clients and we remain confident in our business model, strategy and long-term growth prospects. We will continue to invest selectively to build the business and retain a disciplined focus on operating expenses."

Liberum said outflows in discretionary funds remained relatively low, suggesting that market uncertainty during the period led investors to hold back rather than withdraw funds.

"We believe it very likely that net inflows would again accelerate if markets recover and Brexit uncertainty is removed," it said.

"We reduce forecasts by 10.5% in 2019 and 19% in 2020. This is a result of marking to market funds under management and reducing discretionary net flows to an annualised 5% from 7%."

At 1050 GMT, the shares were down 3.7% to 303p.

Numis said the update was worse than it expected in terms of investment performance and revenue, but net flows were slightly better than it expected. The brokerage had expected FUM of £39.8bn and net flows of £0.2bn.