THE impact on the City from the chaos in central government was laid bare today when Schroders revealed that its funds plunged by an extraordinary £21 billion in the last three months.
That is a direct result of the crisis in pension funds that followed the now ditched mini-budget that saw investors panic sell British bonds due to concern about the state of the nation’s long term finances.
Schroders, one of the grandest names in the Square Mile, has been around since 1804 and is generally regarded as one of the most stable and best run City institutions.
Its assets tumbled from £773 billion to £752 billion between July and September, largely due to the LDI (liability driven investment) strategies that pension funds use to match up assets and liabilities.
When the gilt market crashed and the Bank of England was forced to intervene, some pensions were close to collapse.
Schroders did not comment beyond its statement to the stock market today, and chief executive Peter Harrison declined to speak to the Standard. Schroders shares have halved in the past year to 375p today.
Schroders is far from the only City firm affected by market turmoil, but it seems to be one of the worst hit.
Its rival Jupiter Fund Management today reported that clients pulled £600 million from the company in the last quarter. The state of the industry is such that Jupiter regarded this as a sign that the business is improving.
Jupiter’s assets are down by £11 billion this year to £49 billion.
New chief executive Matthew Beesley told the Standard that while global issues are at play, “there are very clearly some additional challenges to the UK market…due to the fiscal approach from the government”.
He cited “a worsening macroeconomic backdrop, continued geopolitical challenges and inflationary concerns, particularly in the UK”. Jupiter shares are down 63% this year.
