Brooks Macdonald outflows surge to £300m as cost-cutting pays off

Investors in Brooks Macdonald pulled £300m from the asset manager’s funds last quarter, as the firm’s cost-cutting programme begins to come to fruition.

The outflows were a significant uptick from the previous two quarters, where the investors only pulled £98m and £70m from the asset manager.

In a stock exchange notice today, the asset manager revealed that funds under management had increased to £17.9bn, despite the significant outflows, due to investment performance adding £600m to its assets.

Brooks Macdonald announced 50 job cuts to its business last October, and today said it would “continue to realise the cost benefits of the organisational changes… while retaining a focus on operational excellence”.

While many managers have seen markets rebound over recent months and brought in profits on the back of performance fees, inflationary pressures have pushed many to make job cuts.

Abrdn and Blackrock said in January they would be cutting hundreds of jobs, while the last month has seen Ruffer and Fidelity International planning sweeping cuts, including 1000 being laid off at the latter.

Numis analysts Kim Bergoe and David McCann praised the group’s efficiency, noting it had outsourced its core IT operations to SS&C, with the costs based on total assets.

“We believe that in an environment where AuM growth is restricted and wage inflation in IT services appears high, the SS&C deal is a significant advantage for Brooks Macdonald,” said Bergoe and McCann.

Many analysts have also described Brooks as a ‘takeover target’, as mid-sized asset managers increasingly consolidate and look for new sources of revenue, leaving investors eager for a potential offer.

Meanwhile, the group announced last month that it had put its international business arm under review.

“The strategic review of the group’s international operations is progressing and we will communicate the outcome later this year,” Brooks Macdonald said.