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Rathbone growth on the cheap

In the fleshy world of investment management Rathbone Brothers stands out as a niche player with enough scale to deliver long-term returns, which should be aided by a recent £150m acquisition.
Rathbone growth on the cheap

The fund management industry is a strange hybrid of companies that manage piles of assets so large they can be seen from the moon. Some seen to trade purely on their name, while others find a distinct niche. Rathbone Brothers (RAT) falls into the latter category. It can is a specialist fund manager and advisory business with a share of roughly 3.8 per cent of the total UK wealth management market.

IC TIP: Buy at 2,055p
Tip style
Value
Risk rating
Low
Timescale
Long Term
Bull points

 

  • Acquisition to improve performance of advisory business
  • A long-standing ESG presence chimes with market trends
  • Strong growth in funds business
  • Not too big to be an acquisition target itself
Bear points

 

  • Parts of the business are growing at different speeds

Because of its manageable size, there is a distinct possibility that Rathbone could itself become a target for a larger predator. As things stand, Rathbones looks like it could be the most engaging investment prospect in the asset management industry – and one which isn’t guarded by a high rating for the shares

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