Brewin Dolphin (BRW) has spent the past three years putting its recovery plan into action. This included consolidating its offices, focusing on higher-margin discretionary wealth management and exiting non-core businesses. It has also transformed its back-office in response to regulatory changes, while still growing its funds under management. As a result earnings growth is set to ramp up from this year and there is a dividend yield above 5 per cent on offer. However, this progress is not reflected in the price of the shares, which are trading at a lower level than any of its peers.
- Trading at a discount to sector
- Growing discretionary assets
- Fat dividend yield
- Improving margins
- Exposed to changing investor sentiment
- Advisory income falling
Brewin has been steadily growing its discretionary fund management business. During the six months to the end of March discretionary funds were up 9 per cent to £31.5bn. This is compared to a 5 per cent increase in the MSCI WMA Private Investor index during the same period. This consisted of £1.1bn in net inflows and £1.6bn in investment gains. Discretionary funds - where a client hands over the day-to-day running of their portfolio - accounted for 95 per cent of core income at the end of March. This was thanks to a larger proportion of funds being managed on a discretionary basis - 83 per cent at the end of March, up from 63 per cent at the same time three years earlier. Brewin has also been helped by growth in the average size of client portfolios. At the end of September it was £590,000, compared with £498,000 in the previous year.