Updating Our Schroders AUM Estimates Results in FVE Increasing to GBP 41 per Share

We have updated our model for narrow-moat Schroders to take into consideration changes in its assets under management, or AUM, due to market movement and client flows. We estimate Schroders will finish the year with AUM of GBP 569 billion, a 14% year-on-year increase, 10% driven by continued strong client inflows and 4% by the broad recovery in markets since the lows of spring 2020. We increase our fair value estimate to GBP 41/share compared with GBP 35.50/share previously. We maintain our narrow moat rating. Despite the increase in our fair value, Schroders now trades in 3-star territory with a price/fair value estimate of 0.9 times suggesting limited upside potential. For dividend-focussed investors a 3.3% dividend yield may however, look enticing compared with the broader market--the Morningstar Developed Europe Index currently offers a dividend yield of around 2%.