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* Schroders AUM rise to 700.4 billion pounds ($977.7
billion)
* Money manager reports net new business of 17.9 bln stg
* Tug of war between inflationary fears and growth worries -
CEO
(Adds CEO comments from the call)
By Muvija M
July 29 (Reuters) - Low interest rates are bolstering money
managers like Schroders, its chief executive said on
Thursday as the British firm posted a jump in first-half profits
and record high assets under management of 700.4 billion pounds
($977.7 billion).
The low rate environment has been a major driver of flows
into equities while competing assets of cash or fixed income
were "very unattractive", CEO Peter Harrison told Reuters.
Robust investor sentiment amid trillions of dollars in
government stimulus has also helped, with Schroders saying
demand for its mutual funds and higher margin equity products
increased.
"Savings rates are higher but many of the flows have also
come from institutions, so I think the key driver will be
interest rates remaining low and markets remaining stable,"
Harrison said.
Schroders, which lifted its interim dividend by 6% to 37
pence a share, said pretax profit rose 33% to 373.9 million
pounds ($521.03 million) for the six months ended June 30. It
booked in net new business of 17.9 billion pounds.
The company said total assets under management climbed 6%,
with strong demand for its higher margin equity-focused mutual
funds, especially from clients in the United States and
continental Europe, helped by rising markets.
Financial updates from three other asset managers this week
also showed inflows running at billions of pounds.
However Harrison said he was mindful of the fact that
markets had "travelled up a long way".
"There is clearly lots of evidence, particularly in private
markets of a bit of trough. It is not something that is keeping
me awake a lot at night at the moment," he added.
Schroders also cautioned that if inflationary pressures
persisted, or the recovery in economic growth disappointed,
there could be increased market volatility which would impact
its business.
"There is a tug of war going on. On the one hand we have
fears of inflation and on the other hand we have fears of growth
slowing. Three weeks ago the world was talking about more
inflation and now the world is more worried about too little
growth," Harrison said.
"Somebody used the phrase goldilocks ... arguably we are in
that place where it is neither one nor the other, and that is
not too bad for financial markets."
Separately, Schroders announced that Elizabeth Corley would
be joining as a non-executive director, and that she would
succeed Michael Dobson as its chairperson at the end of the
company's shareholder meeting in April next year.
Corley, currently a director at Pearson, BAE
Systems and Morgan Stanley, has previously
headed Allianz Global Investors.
($1 = 0.7176 pounds)
(Reporting by Muvija M in Bengaluru and Abhinav Ramnarayan in
London; Editing by Carolyn Cohn and Pravin Char)
