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Schroders Plans to Eliminate Hundreds of Jobs to Trim Costs

Dinesh Nair, Patrick Winters and Lucca de Paoli

(Bloomberg) -- Schroders Plc is cutting hundreds of jobs around the world as it grapples with a downturn in the industry, according to people with knowledge of the matter.

The U.K. firm, which manages about 450 billion pounds ($590 billion), has been eliminating positions for several weeks, said the people, who asked not to be identified because the process is private. The cuts will affect about 5% of the company’s workforce, or at least 200 jobs, one of the people said.

“We have a number of initiatives across the group to drive greater efficiencies and generate growth,” according to an emailed statement from the company. “This includes realigning our resources which allows us to continue investing where we see strategic growth opportunities, in areas such as private assets and wealth management.”

Tracking Funds

Active fund managers like Schroders, which try to outperform their benchmarks by buying and selling securities, have come under enormous pressure in recent years from funds that track an index and typically charge lower fees. The shift of investors’ cash into passive investments reached a milestone this year when index funds and ETFs finally eclipsed old-fashioned stock pickers in the U.S.

In the U.K., some funds have come under scrutiny from regulators and investors this year for allowing daily withdrawals while investing in assets that can be hard to sell on short notice. Neil Woodford, once among the country’s most feted stock pickers, was forced to freeze his flagship fund in the face of redemption demands and finally to shutter his investment firm. Natixis SA-backed H2O Asset Management saw investors pull 8 billion euros in just two weeks following reports about its thinly traded holdings.

On Wednesday, M&G Plc’s investment business froze its flagship U.K. real estate fund after Brexit and the spiraling crisis in the retail property market prompted investors to flee.

Read more: M&G Freezes Flagship Real Estate Fund as Withdrawals Mount

Schroders is looking to expand in wealth management, which it sees as an opportunity for growth with an aging U.K. population and increased pension freedoms. Wealth management also generates a bigger revenue margin than the company’s asset management business. It has launched a joint venture with Lloyds Banking Group Plc for affluent customers.

The firm saw outflows slow in the first six months of the year after a bruising 2018. Clients pulled out 1.2 billion pounds from the two-century-old money manager in the first half, down from the 9.5 billion pounds of outflows in the previous six months.

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--With assistance from Nishant Kumar.

To contact the reporters on this story: Dinesh Nair in London at dnair5@bloomberg.net;Patrick Winters in Zurich at pwinters3@bloomberg.net;Lucca de Paoli in London at gdepaoli1@bloomberg.net

To contact the editors responsible for this story: Shelley Robinson at ssmith118@bloomberg.net, Patrick Henry

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