The solutions unit, which houses Schroders' outsourced CIO and liability-driven investment business, gained £12 billion in net inflows despite buyout activity in the market, it said. Flows were flat in 2022, according to a presentation of the results by the firm. Solutions AUM was up by 8.8% to £228.3 billion as of Dec. 31.
The firm's public markets business "was more impacted by market sentiment," the update said, with £13.4 billion in net outflows from mutual funds and institutional allocations. Schroders also highlighted the challenging year for active investors, given concentration in U.S. equity markets with the so-called Magnificent Seven driving markets.
"In one of the most challenging years for global active asset managers in recent times, our resilient performance in 2023 demonstrated the consistent execution and benefits of our long-term strategy for clients and shareholders," said Peter Harrison, group CEO, in the update. He highlighted that private markets, wealth management and solutions, which the firm has worked to develop, now account for 56% of AUM and 48% of net operating revenue.
"Looking forward, the markets remain unsettled because of geopolitical uncertainty in a year of electoral change," Harrison said. "Whilst our profits last year were impacted by headwinds in the markets and adverse foreign-exchange rates, we took steps to proactively manage our cost base and delivered efficiency initiatives to enable future reinvestment in the business. We therefore start this year in a strong position to capitalize on some interesting market opportunities, with the prospect of interest rates falling and the rotation of clients' assets back into risk assets."
Schroders also said it has identified 80 distinct use cases for artificial intelligence across the group.
Separately, Man Group said its AUM increased to a record $167.5 billion as of Dec. 31, up 16.9% for the year.
Net inflows totaled $3 billion, down slightly from the $3.1 billion recorded in 2022, an update said. Alternative strategies attracted $2.4 billion of net inflows, down from $3.4 billion the previous year, while long-only brought in $600 million, vs. $300 million in net outflows in 2022.
"2023 was a year that defied market expectations as the world grappled with macroeconomic uncertainty and unforeseen geopolitical events," CEO Robyn Grew said in the update. The firm's results "reflect the quality of the business we have built, including the breadth and depth of our client relationships, and the merits of our diversified product offering," she added.
"Beyond driving investment performance, our priorities are to continue expanding our investment capabilities, to extend our reach with clients across new and existing geographies and market segments, and to leverage our strengths and scale to deliver more customized solutions," Grew said.
In terms of adding to investment capabilities, the firm sees the largest opportunities in quantitative equities "across mid-frequency and long-only, and in credit, across liquid and private markets," the update added. "We are also prioritizing building out our solutions offering, acknowledging that customization and transparency are of ever-increasing importance to sophisticated allocators across the globe."
Man Group will also continue to prioritize its global distribution network, expanding its presence in markets where it is underweight relative to the size of the opportunity, such as North America, intermediated wealth and insurance.
