July 10, 2017 / 4:23 PM / 8 months ago

Fitch Affirms Schroders' IMQR at 'Excellent'

(The following statement was released by the rating agency) PARIS, July 10 (Fitch) Fitch Ratings has affirmed Schroder Investment Management's (Schroders) Investment Management Quality Rating (IMQR) at 'Excellent'. The Outlook is Stable. KEY RATING DRIVERS The rating primarily reflects Schroders research-led investment processes, implemented in a disciplined manner across a diversified book of businesses and within a solid risk management framework. Fitch views positively the actions taken by Schroders to address industry challenges, re-investing in future, higher-margin business growth while implementing a more cost-efficient operating model. The rating factors in the execution risk inherent in the roll-out of the enterprise-wide Aladdin operational system. It also factors in the business and investment risks arising from both capabilities expansion (such as private assets and alternatives, innovative solutions) and client base development (notably in North America and Asia Pacific). Schroder's 'Excellent' rating is based on the following category scores: Investment Process: Excellent Investment Resources: Excellent Risk Management: Excellent Investment Performance: Consistent Company and Client Servicing: Excellent The above category scores result from an asset weighting average of the scores obtained in each of the main business units / strategies of Schroders, namely equities, multi-assets and fixed income. Schroders' IMQ Rating references the investment activities based in the global investment hub, London (excluding the alternatives and real estate business). Investment Process Schroders' active, mainly research-driven investment process is implemented across a broad range of strategies by accountable, focused staff in a risk-controlled manner. Overall, portfolio construction follows a disciplined risk-budgeting approach, supported by proprietary risk analytics. The investment process has proven stable, with notable enhancements as markets, client needs and financial engineering evolve. Accordingly, Schroders is enhancing its capabilities in private assets, alternatives and multi-asset solutions. Investment Resources Schroders has managed to keep its organisation of investment teams and processes simple and efficient, despite its business growing in size and complexity over the past five years. Notably, a new product division was recently created to enhance strategic innovation and product development and to consolidate the solutions business. Schroders' board and senior management changes in 2015-2016 have now settled down and are well-integrated, demonstrating the organisation's ability to renew leadership and manage successions. Schroders is in the process of rolling out the Aladdin system and upgrading its data architecture globally. The implementation of a single, enterprise-wide system aims to simplify the existing IT platform, streamline related operational processes, and enhance global integration, ultimately reducing infrastructure costs. Risk Management Schroders has an effective, highly structured, risk and governance framework that is deeply embedded in the business and which also benefits from the independent oversight by influential risk functions and committees. Mechanisms to address risk challenges and risk escalation are formalised and operate effectively, in Fitch's view. Investment risk management is embedded in the investment process via detailed risk budgeting and investment guidelines. Risk management procedures have evolved to adapt to the increasing sophistication of Schroders' strategies and instruments. Investment Performance Overall, Schroders' risk-adjusted performance has been consistent, relative to peers and benchmarks, with an overall improvement observed over the past 12 months. Seventy-four per cent and 85% of Schroder's assets under management (AUM) have outperformed benchmarks over three and five years gross of fees, respectively, as at end-December 2016 - an improvement on the previous year. Also, Fitch estimates that 50% to 60% of AUM (funds excluding mandates) have a Sharpe ratio (a risk-adjusted measure of performance) above that of the Lipper category average over three and five years, based on Lipper data. A majority of AUM (excluding mandates) also show better drawdown statistics than the fund's Lipper category average over three and five years. Company and Client Servicing The company has a global, diversified, long-established and expanding franchise. The business evolved mainly through organic growth but more recently, through targeted acquisitions in key regions (eg the US) and asset classes (eg securitised credit, private assets). Schroders is a global asset management company and the core subsidiary of Schroders Plc (A+/Stable/F1). At end-March 2017, Schroders managed GBP361.9 billion (GBP405.1 billion, including wealth management), of which 64% was for institutional clients, 35% for intermediaries. RATING SENSITIVITIES The rating may be sensitive to material adverse changes to any of the aforementioned rating drivers, notably through weakened financial conditions, heightened staff turnover or deterioration of processes and policies. A material deviation from Fitch's guidelines for any key rating drivers could cause the rating to be downgraded. Specifically, should Fitch determine that the rollout of Aladdin results in process disruption, operational losses or staff turnover, the agency may place the rating on Negative Watch while it evaluates the extent to which investment and operational capabilities are undermined. Fitch will closely monitor implementation risks during the 18-24 month system migration period. Contact: Manuel Arrive, CFA Senior Director +33 1 44 29 91 77 Fitch France S.A.S. 60 rue de Monceau Paris 75008 Secondary Analyst Abis Soetan Director +44 20 3530 1311 Committee Chairperson Ralph Aurora Senior Director +1 212 908 0528 Media Relations: Rose Connolly, London, Tel: +44 203 530 1741, Email: rose.connolly@fitchratings.com. Additional information is available on www.fitchratings.com Applicable Criteria Investment Management Quality Ratings (Assessing Active, Passive & Alternative Investment Managers, Strategies & Funds) (pub. 06 Mar 2017) here Additional Disclosures Solicitation Status here#solicitation Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE here. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2017 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below