St James's Place reported that its funds under management reached a record high in the third quarter, as strong market performance counterbalanced a growing number of clients withdrawing money from its funds.
Funds under management (FUM) rose 14.2 per cent to £242.4bn, which the firm attributed to improved market performance.
Inflows slow amid market volatility
The wealth manager attracted £1bn in investment returns during the period, bringing year-to-date returns to £19.1bn.
However, the FTSE 100 firm reported a slowdown in inflows. Gross inflows reached £5.1bn in the quarter, down from £5.7bn the previous year, as reported by City AM.
Net inflows also fell sharply to £0.5bn from £1.7bn. Chief executive Mark FitzPatrick attributed the decline to heightened client caution driven by "market volatility" and uncertainty ahead of the Autumn Budget.
FitzPatrick further noted that the momentum generated by the rollout of its new charging structure last year, which had triggered a surge in activity, had since eased.
Increased exposure to North American and Asian equities
The group also increased its North American equities exposure to 40 per cent, equivalent to £95.5bn, while boosting its investment in Asian equities by 14 per cent to £38.7bn.
Its exposure to UK assets remained modest, accounting for just eight per cent of its portfolio at £20.3bn, with European equities also comprising a mere 12 per cent.
Client retention holds firm
Despite the dip in inflows, client retention held firm at 95.1 per cent. Outflows also remained broadly stable at 5.1 per cent, edging down slightly from last year's 5.2 per cent.
FitzPatrick attributed the performance to business simplification, "improving efficiency" and unlocking additional investment opportunities.
"We continue to invest in the areas that will drive future growth, including enhancing the proposition and experience for clients... and using technology and AI to improve productivity across the business," he said.
However, Max Harper, analyst at Third Bridge, noted that while concerns surrounding tax are prompting customers to seek advice, the group's "charges still continue to be expensive, compared to corners of the market.
"Consumer duty has brought fees into the clear, with outflows posing a threat, combined with differing generational approaches to wealth management, potentially causing younger prospective clients to handle their own portfolios," he said.
