Schroders had $663 billion in assets, more than 30 offices around the globe, and less than 1 percent market share in the U.S. Obviously, the asset manager had a hole to fill.
Gaining ground in the hyper-competitive and mature American market, however, would mean taking it from the existing players.
Marc Brookman, CEO of Schroders North America, predicted in mid-February that the firm would make headway in the U.S. once volatility returned. Investors would want what Schroders had to offer, he told Institutional Investor during the interview at Schroders’ Bryant Park offices. Investors would remember that risk matters.
“Volatility can be our friend,” Brookman recently reminded his team, all working from home, in a note. “The firms with hundreds of sales people are grounded. That makes us the same size as every other asset management firm in the world right now.”
Brookman joined Schroders not so long ago, in July 2018 after 12 years at Morgan Stanley leading Graystone Consulting and institutional wealth services. He said he joined Schroders because he could not believe how little-known it was in the U.S., given the firm’s expansive capabilities from active equity, credit, and alternatives, to micro-cap Japanese equity and China funds.
So far, Schroders is racking up positive flows in both the intermediary and institutional channels. Significant mandates approved last year are still coming in, although Brookman admitted in a recent call with II that it’s hard not to be nervous about new business.
[II Deep Dive: McKinsey: Where Active Management Survives]
Schroders year-to-date inflows as of mid-April total $3.6 billion across international/global equity, securitized credit, value fixed income, emerging markets equities, and Japan micro-cap equities. The wins include a mandate of more than $1 billion from Columbia Threadneedle for its international alpha strategy, according to public filings.
In securitized credit, the firm is raising money in the daily liquidity mutual fund, quarterly liquidity interval funds, and institutional vehicles. Some investors have increased their commitments to products such as a securitized credit real estate vehicle, given the dislocations in that market.
Over the last 18 months, Brookman said, “I’ve heard about how we are long-term thinkers, with 46 percent of Schoders owned by the family. But I’m witnessing that right now. In this massively challenged environment, I’m watching my firm stepping up. We have not announced a hiring freeze or headcount reduction,” other than to say “‘Let’s be smart.’ But if we need to hire, we’re going to hire. We’re not cutting employees.”
The firm is still pursuing strategic acquisitions and talking with smaller firms that are under significant pressure with few buyers around. “Yes, every firm is 30 percent smaller than they were and prices will change. But this is one point in time. If you are generating alpha and increasing revenues — those are the things that we look at,” he said.
Brookman isn’t discounting the damage to the global economy wrought by the pandemic, but Schroders has a long history and a presence in 32 countries. It’s also still launching new products. “We have people in China, for example, who live in Wuhan, who are based in Hong Kong. We are rolling out a China fund. It’s either the best or the worst time to roll out a China fund,”