A rising tide lifts all boats and these three investment-related stocks have all been lifted by rising FTSE 100 fortunes. But could the tide be set to turn?
Aberdeen Asset Management
After a disastrous 2015, when Aberdeen Asset Management (LSE: ADN) saw its share price halve from around 500p to 250p, investors were due a reprieve. Aberdeen was hit hard by the slowdown in its chosen specialist region of emerging markets, as disgruntled investors headed for the exits in search of more rewarding pastures. Worryingly, net fund outflows have continued in 2016, with £8.9bn bolting in the third quarter. But the good news this time round is that the losses have been more than offset by £17.5bn in asset appreciation. Assets under management duly totalled £301.4bn in June, up from £292.8bn three months earlier.
Fund outflows are slowing as investors recapture their faith in emerging markets, as anybody who understands that investments go in cycles would have expected. But the tide has really turned in favour of Aberdeen since Brexit, and the stock is up 22% in the past three months. Sterling weakness has boosted the value of its overseas assets under management, and as the pound plumbs new depths, the next quarterly figure will make interesting reading. Despite its resurgence, Aberdeen still trades at just 11.03 times earnings and yields 5.73%. So the valuation doesn’t look toppy, even if the stock market does.
Schroders
Asset management group Schroders (LSE: SDR) also fell sharply after the last stock market peak in April 2015, hit by falling profits and a sharp slowdown in first-half net inflows, from £8.8bn to just £0.7bn year-on-year. In July, chief executive Peter Harrison blamed the Brexit vote for the company’s short-term slips and warned of a further hit to investment demand. Well, he got that wrong, didn’t he? Brexit has come charging to the rescue, with markets surging on the back of fresh monetary stimulus and the falling pound.
The Schroders share price is up 21% in the last three months, echoing Aberdeen’s figure, further evidence that stock market trends are driving performance rather than individual company news. Schroder’s struggles when the pound is strong and will cash in on current weakness. Its stock is more expensive than Aberdeen however, trading at 15.85 times earnings and yielding just 3.11%.
St James’s Place
Wealth manager St James’s Place (LSE: STJ) has had a great Brexit, its share price soaring 28% in the last three months. Not that it needed this artificial booster as it’s up 200% over the past five years. The advisory group reported record inflows of £5.3bn in July, up from £4.4bn one year earlier, lifting total group funds under management from £55.5bn to £65.6bn on the year. The group grew strongly despite recent market turbulence, with adviser numbers, profits and just about everything else rising sharply.
The post-referendum market surge has floated its boat but before you get too excited beware its pricey valuation of 24.35 times earnings, with a relatively lowly yield of 2.88%. At this price, St James’s may no longer be the Place to be.
