Schroders share price: Fund manager moves pension assets into bonds

on Jan 27, 2014
Updated: Apr 9, 2020
Listen, Monday, January 27: Schroders (LON:SDR), Europe’s largest publicly traded fund manager, has switched a large chunk of its £807 million pension fund assets out of equities into bonds, The Financial Times reported yesterday.

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The newspaper quoted Alan Brown, a trustee of the group’s pension scheme, as saying: “The improvement in financial markets has given us another opportunity to reduce risk.”
Schroder’s move is at odds with analyst projections that the 2013 stock market rally would reverse the decade-long trend of defined benefit pension schemes, which guarantee retirement income, reducing their exposure to the volatility of equities.

Industry peers are expected to follow Schroders’s move. An unnamed pension trustee of another big UK scheme told the FT that it was looking at further de-risking its portfolios in a similar way to Schroders because of the increasing likelihood that interest rates would rise.
An interest rate rise helps pension schemes as it improves their balance sheets by reducing deficits. Pension scheme deficits are worked out by bond yields, which tends to move in line with interest rates. The higher the bond yield, the more the pension fund is expected to earn in returns.

***Schroders share price on the low***
In London trading so far today, Schroders’ share price has fallen 1.35 percent, adding to Friday’s decline of 2.71 percent. As of 11:08 UTC, the stock was trading at 2,480.00p.
The fund manager, which earlier this month launched a new high conviction European credit fund (Schroders share price: Company launches new European fund), had its ‘neutral’ rating reiterated by research analysts at BNP Paribas in a research note issued to investors on Friday. The broker currently has a 2,500p price target on the shares, pointing to a potential downside of 3.25 percent from the current price. Last Monday, analysts at Credit Suisse, who also have a “neutral” rating on the stock, raised their price target on the firm from 2,550p to 2,810p.

Macquarie reaffirmed an ‘outperform’ rating for Schroders in a research note to investors on Friday, January 17. It now has a 3,040p price target on the stock. A week earlier, JPMorgan Chase & Co., whose analysts have an ‘overweight’ rating on the fund manager, raised its price target on the shares from 2,791p to 2,802p.

Following these most recent rating updates, 15 research analyst have a ‘hold’ rating on Schroders and nine have it as a ‘buy’, AnalystRatingsNetwork data showed. The stock’s average rating is ‘hold’ with a consensus price target of 2,458.41p.
**As of 09:15 UTC, buy Schroders shares at 2,475.00p.**
**As of 09:15 UTC, sell Schroders shares at 2,471.00p.**
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