After experiencing market highs and strong performance in the prior year, the broad investment environment– which was characterised by heightened volatility – provided headwinds for the Sarasin Group in 2018.
Global equity markets fell significantly towards the end of a year that saw elevated market turbulence, large drawdowns due to higher bond yields in the US, trade tensions and continued economic and political uncertainty stemming from the UK’s potential withdrawal from the European Union.
In this context, Sarasin Group assets under management ended 2018 at £12.4bn, down from £14.5bn a year earlier. In addition to the impact of market movement, an element of contraction related to net business outflow from the Group’s intermediate parent and the institutional client base.
The Charities division maintained its position as a leading provider of investment solutions in the UK’s not-for-profit and charities sector, with assets under management of £6.1bn at the end of 2018. The Private Client division generated net new business inflow during the year with assets under management closing at £3.0bn.
Group net revenue fell by 6% to £68.4m from £73.1m for the year and Operating profit fell to £25.0m from £29.4m, reflecting the drop in assets under management and first-time absorption of research costs (post MiFID II).
Whilst markets have rebounded over the first seven months of 2019 (assets under management having increased to £14.3bn as at 01.08.2019), the Group remains alert to continued bouts of market volatility.
Guy Matthews, Sarasin Group Managing Partner, comments: “The business is in a strong position given the level of investment in our talent and technology over the past few years. We have seen significantly improving investment performance against our peers and are starting to see this reflected in an increasing inflow of new business.
While general market conditions remain difficult given the market volatility, increasing regulatory burden and uncertainty of Brexit, we are confident that we will continue to provide a strong proposition for our clients in both investment performance and service.”