April 25, 2017 / 6:46 AM / in 7 months

UPDATE 2-St. James's Place says Q1 net inflows 2 bln stg

* Total funds under management 79.8 bln stg

* Retention of client funds at 95 pct

* Investment returns help underpin asset rise (Adds analyst quotes, share price reaction)

By Simon Jessop

LONDON, April 25 (Reuters) - St. James’s Place took in 2 billion pounds ($2.56 billion) in net new money in the first quarter, the British wealth manager said on Tuesday, boosted by demand for pension and savings products.

St James‘s, which focuses on providing face-to-face financial planning for wealthier clients, said positive investment returns also helped support a rise in assets, sending its shares higher.

Group funds under management rose to 79.8 billion pounds at the end of March from 62 billion a year earlier. They were underpinned by strong retention of clients funds at 95 percent, it said in a statement.

“Looking ahead, whilst political and macro uncertainties persist, the more immediate concern for many people relates to personal financial matters,” outgoing Chief Executive David Bellamy said.

At 0706 GMT, shares in St James’s Place were up 0.5 percent in a flat FTSE 100.

Shore Capital analyst Eamonn Flanagan said the results were “terrific”, with flows and total assets ahead of both his and consensus expectations. In a note to clients he reiterated a ‘buy’ recommendation and 1,115 pence price target.

“The SJP model... is flourishing and is likely to continue to do so, in our view. Political uncertainty, regulatory changes and persistent tweaking of the tax and pension regimes in the UK delivers the conditions for SJP to thrive.”

Gross inflows were up 32 percent to 3.2 billion pounds, while investment returns added a further 2.8 billion, it said.

Demand to access tax-free savings into the end of the tax year helped support gross flows, with 1.2 billion pounds invested into its unit trusts and individual savings accounts, up 46 percent on the year.

JPMorgan Cazenove analyst Ashik Musaddi said St James’s was well positioned to grow new business sales by 15-20 percent a year, in a note to clients reiterating an ‘overweight’ rating on the stock.

At the end of March, 23 percent of the firm’s investments were in UK equities, with a similar amount in U.S. stocks, 17 percent in fixed interest and 12 percent in European equities, it said.

$1 = 0.7815 pounds Reporting by Simon Jessop; editing by Rachel Armstrong and Jason Neely

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