A Peel Hunt note issued today (15 October) has listed Brooks Macdonald Group as a 'buy', on the day the firm reports its quarterly trading update, despite outflows from its managed portfolio service (MPS) arm.
The analyst said said the MPS outflows were "as expected" given the challenging backdrop, adding that "there is clear upside, which will be further enhanced by a return to positive flow momentum which we expect overall in FY21."
"Despite the operational progress over the last year, Brooks' share price has been held back by weaker flows and general market sentiment," the note said.
In its quarterly update, Brooks Macdonald Group reported a 3.9% increase in funds under management (FUM) within the international arm of its business over the last financial quarter, as the business progresses with its "bold and exciting strategy" to become the "leading investment manager" for intermediaries.
The inflows reflect the "continued reinvigoration" of its Channel Islands business, according to the firm, with the acquisition of Lloyds Bank's Channel Islands wealth management and funds business set to complete during the next quarter - which is expected to add a further £1bn to FUM.
Elsewhere, strong investment performance relative to the MSCI PIMFA Private Investor Balanced index benchmark led to inflows of £200m across the business as a whole, although these were offset by outflows from its managed portfolio service, with funds shrinking by 3.4% to £2bn. However, Brooks Macdonald said the largest contributor to this was the exit of a single £90m mandate as it moved from discretionary to advisory.
Overall, the group's total funds under management remained flat for the quarter at £13.7bn.
Caroline Connellan, CEO of Brooks Macdonald, said: "The first quarter of our financial year has been in line with expectations. I am pleased with the strong investment performance we delivered, continuing to protect our clients' wealth, as well as positive flows in International as we continue to reinvigorate the business.
"Our vision for Brooks Macdonald is as the leading investment manager for intermediaries, and we look forward with confidence."