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Rathbones delivers decent in-flows

The market was pleasantly surprised as fund manager Rathbones clearly started to feel the impact on in-flows from its acquisitions.
January 12, 2022
  • Acquisitions help fund inflows
  • Still attractively valued

The last quarter of the year is traditionally a leaner time for asset managers as clients cash in profits to fund Christmas and managers begin to think about bonuses. In this context, Rathbones’ (RAT) better-than-expected total fund inflows of 2.1 per cent for 2021 was an interesting development.  Total funds under management now stand at £50.2bn.

Total funds under management now stands at £50.2bn.

In cash terms, the deciding factor seems to have been the Saunderson House acquisition. Rathbones completed the deal in October last year and this contributed nearly £260m of extra inflows in the final quarter, helping to push the total for the period to over £1bn, compared with £915m in the previous quarter. Saunderson House added a suite of high-end advisory services to Rathbones’ offering, although it is still too early to tell how much difference this will make over the course of the year. Currently, the main source of growth is Rathbones’ unit trusts arm, suggesting that retail investors are still heavily engaged in the market.

Analysts are generally wary of the £150m price that Rathbones paid for Saunderson  House, and Panmure Gordon analysts noted that while it was always better to be ahead on funds under management “…the key question with Rathbones, we feel, is its ability to prosper in organic terms in a wealth management market displaying secular growth”. In other words, can the company do more than simply be lifted by the same tide as everyone else?

At 2,050p, Rathbones is moving sideways compared with our tip idea (Rathbones growth on the cheap: 2,060p, 10 Sep 2021), however, the value case is still intact compared with its peers and we wait for a full-year contribution from its acquisitions. Buy.