Right, good morning, everybody. Thank you for joining us. You've invested your time with us this morning. It really is great to see you. And welcome to everyone who has joined us on the Zoom call. So, it is a great privilege to be sitting in front of you as the CEO of this amazing company. And I know you've really come to hear about the results and what we're going to be doing from a strategy perspective. But if you can indulge me, I want to spend a couple of minutes giving you my perspectives, that will hopefully also show why I'm super energized about the group. So I'm going to start with a little bit of a story. So every weekend, I sit down with my two teenage daughters and I scan the newspapers. And we have a chat about what's going on.
You know, like any good parent, I thought that was all about me preparing them for the outside world, and then, of course, what I realize is I get all the benefit because they give me the views from a 19-year-old, so it's super interesting, but of course, the conversation is entirely dominated by, "Dad what's all this geopolitical uncertainty, immigration, demographics? Why is all this uneven growth leading to a changed political environment?" And then, of course, we inevitably get on to the thing of the transformative impact of climate change and AI. Of course, they're way better than me on AI, but those are things that are going to impact their lives and the next generation's lives, and they're not going to go away.
So the key thing for me every week, and it's not quite like Sky r ead the press, by the way, at all, but the thing that's always amazing is they sit there and say, "How do I get certainty in what is an uncertain world?" And the only advice I ever give to them is that now is not the time to be a follower. I'm leaving that message with all of you to have in the back of your minds as we go through today. Because to lead, adapt, and innovate, you have to be active. And I am a vocal advocate for active management because, given the backdrop that came out of that conversation with my daughters, we've got to move the debate away from talking about barbells to actually how do we manage the balance between risk, return, and cost.
And in today's environment, if we can't have that debate, then I don't know when we can. We are the home of active management, a place where some of the industry's best talent aspires to work. And everything we do in managing those assets is in the best interests of our clients. So I know because I've read some of your broker reports that many of you think I obsess about numbers. But the thing that I have grown to obsess about in 30 years are clients. Because no matter what industry you're in, if you win with clients, it's going to drive better outcomes for shareholders and better outcomes for our employees. So my obsession when I'm here at Schroders is not going to change. It's my lens on the world. It's actually why I joined Schroders.
I made a commitment that I would see a client every single day. I've been pretty busy in the last four months. I've seen more than 120 clients. Bottom line, their feedback's amazing. They tell me what a great organization I now lead. What's crucial from those conversations is evidence of the depth and breadth of our client relationships. They drive how we innovate. The deep relationships, plus the breadth of capability in both Public and Private Markets, actually drives our revenue growth. To maintain our relationships and our reputation, we need to drive and deliver strong performance. Not just investment performance, but business performance too. Meagen's going to talk to you about our 2024 results, but here is my headline you can write down. It's not good enough to deliver AUM growth and not operating profit growth.
We care about delivering value for our shareholders as well as our clients, but let's dwell for a moment on strong performance. Because strong, consistent performance is exactly why our clients come to us. It's at the heart of what we do, so Johanna is going to talk about the statistics that we normally talk about a little bit later, but I want to focus on this chart on the left, so thank you, UBS. It is always nice to have someone else tell you how good you are. What it actually shows you is that we are the most consistently high-performing listed asset manager in Europe, active or passive, and we've been one of the top two in every single quarter for the last 20 quarters, and I'm pretty convinced our investors are hungry to make sure that blue line goes to the very top.
That's why clients come to us. That's why we raise a record amount of money in 2024. Our talented investors deliver through the cycle, 20 quarters, and the depth of our bench here at Schroders is astonishing, so I hope you get a sense that I am quite passionate about what we do, and I actually really believe Schroders is a tomorrow company, not a today company, and put simply, we're committed to independent, active management driven by exceptional talent. We have broad, deep relationships with clients that allow us to innovate and remain relevant, and we have a really strong performance as investors, and we strive for that performance as a business, and I'll come back to this because it's really a great story. We have a brand position you just can't replicate.
But look, I think it's important to recognize that Schroders is and will always remain an international business focused on growing markets, headquartered here in London, which we see as the center of talent and innovation for our industry globally. I don't have rose-tinted glasses on. I know there is a lot to do. We will simplify our business, scale it, and deliver to make the best from our brilliant assets. And the entire leadership team that you have in the room today are now focused on getting this business back to profitable growth. And that's why all of you are here today to understand what we're going to do about that. So here's what we're going to cover. First up, Meagen, our new CFO, is going to quickly take you through the 2024 results. Then we'll do Q&A.
After this, you get a 30-minute break, which gives you an opportunity to meet with all of my ExCo colleagues. I'll put their photos up behind you so you can spot them in the room. This is probably the best time for me to say that actually last week we were seeing that we announced that Mary-Anne is stepping down. Where are you, Mary-Anne? Right at the front. She's stepping down as the CEO of our Wealth business. She joined us back in 2013 when Schroders acquired Cazenove Capital, and she has been totally central to that amazing growth story. So I am going to thank her actually on behalf of all shareholders for the great work that she has done. But actually, for me personally, she's been a huge support over the last few months. But I'm also excited that Oliver Gregson is joining us in June.
He brings a deep understanding of the Wealth Management business, most recently at the JP Morgan Parish . I'm looking forward to working with him to deliver the next phase of growth for that business and exploring actually where we can accelerate beyond what we're outlining today. After the break, Meagen and I will be joined on stage by our third executive director, Johanna, who's the Group CIO and CEO of Public Markets, and then we'll go through the Strategy Update. Without further ado, Meagen, over to you.
Thank you, Richard, and thank you, everyone. It's a great privilege to be able to present my first set of results to you for Schroders today. For those who don't know me, I joined Schroders as a Group COO two years ago. Having spent my time delivering transformation, I was curious and excited about being part of the next generation of leadership, leadership in an organization that I'd long admired. Now, as a COO, you need to understand the plumbing of a business and how the organization fits together. And then you need to seamlessly mold it to enable your investors to focus on delivering better client outcomes. So that role at Schroders has given me a great insight as to how Schroders works, front to back across the organization, understanding the levers for profit and the drivers of cost.
Now, as a CFO, I have a great opportunity to leverage those insights and to build a culture which is commercially focused. I have three main priorities. One, embedding cost discipline in our DNA as we scale. Two, ensuring that our resources and our capital are focused where we get good shareholder returns. And thirdly, injecting the energy to deliver our transformation at pace. Now, as I take you through the results today, I will highlight areas where we have strong foundations, and I will also show you where we have more work to do. You have asked us to improve our financial reporting and disclosures. We've listened, and I'll explain the plan on how we intend to move forward with greater clarity and transparency. With that, let's move on to the 2024 results.
As you can see, our results came in a little ahead of expectations, thanks largely to the better markets at the end of the year. There are three key things I want to draw out on this slide. Firstly, our net operating income was stable. This despite the net outflows of Institutional and Solutions business highlighted in Q3. This is attributable to our growth in Wealth, Schroders Capital, and also, importantly, the resilience of our Mutual Fund gross flows. Secondly, we contained our operating expenses to 2%, and finally, we can't overlook the fact that our operating profit was down despite the 4% growth in AUM. Moving on to funds and flows. Our AUM finished the year 4% above at GBP 778.7 billion because of strong markets and investment performance. Key to me on this slide is our flows data.
We saw an impressive GBP 129.7 billion of gross inflows this year, the highest we've had since 2020. This points to the sustained client interest and demand across all of our capabilities. In Public Markets, our Mutual Funds returned to net inflow after two years of outflow. This is possible only because of the quality and the breadth of our investment capabilities. We saw the greatest flow into fixed income and global equities and outflows in the higher margin regional equity strategies. In Solutions, OCIO performed very well, but the positive flows were masked by the outflows in the Scottish Widows mandates. We'd normally expect those outflows to be about GBP 3 billion a year, but this was closer to GBP 14 billion as they chose to exit the bulk purchase annuity market and switch out of their quantitative equity strategies. This said, there is tremendous value in our partnership with Lloyds Banking.
The group extends across relationships across Scottish Widows, Cazenove Capital, and Schroders Personal Wealth. In Wealth Management, we had another strong year. Our total net new business was in line with our guidance in Q3, but our AUM was up 15%. If we just look at Cazenove Capital in the U.K., our organic net new business rate was industry leading at 8% this year. In Schroders Capital, we finished the year in line with our Q3 guidance. Now, what the net new business numbers don't tell you is that the gross fundraising increased to GBP 10.8 billion, or 16% of our opening AUM. Finally, our JVs. These interests provide our shareholders with an attractive exposure to high potential markets. In 2024, our net new number was positive across all the JVs. Axis drove most of the flows, contributing GBP 3.4 billion of the GBP 6 billion in total.
Turning on to operating income. The thing that jumps out to me on the slide is the benefit from investment performance and buoyant markets. This was partially eroded by the adverse FX movements, mainly due to our exposure in the U.S. dollar and the net outflows I just mentioned. Our performance fees and carry were down GBP 21 million on the previous year, but higher than we'd guided in Q3. That was largely due to the strengthening of markets at the end of the year, which supported higher performance in our Public Markets business, alongside some earlier than expected distributions from several of our Private Equity funds, where they were triggered in terms of the anticipated carry. Looking into 2025, the usual caveats apply. It's difficult to predict the levels of performance fees and carry in any one year.
We are, however, currently assuming the level of fees in line with the GBP 63 million we earned in 2024. Our income from JVs and associates reduced slightly. This was largely driven by the BOCOM Fund Management venture, where we felt the full year impact of the fee wide caps that were introduced in 2023. This was partially offset by the growth in AUM and the good momentum in the ventures of Axis and Schroders Personal Wealth. So overall, pulling our operating income together was marginally up year-on-year. It demonstrates the breadth and the sources of operating income that will give us stability through the various cycles. Let's take a closer look at the segments, starting with Asset Management. You will notice that we are now reporting Solutions as part of Public Markets.
This is because we manage it together with Public Markets offerings in terms of the way in which we support our ability to meet our clients' demands. There are a couple of things that stand out on the slide for me. The first thing is the diverse sources of income in terms of our asset management business, and the secondly is the chart on the bottom left with the challenging operating profit trajectory, which we faced in the segment. We will talk more about this later in our plans as we address this as part of our strategy when Johanna talks. Moving on to Public Markets. Now, there's a lot on the slide, so let me talk you through it. Starting with the chart on the top, we saw a 2% reduction in our net operating revenue for the Public Markets in 2024.
The key drivers were the outflows in Solutions and the softening of margins in Mutual Funds and Institutional, reflecting the change in mix of what our clients are demanding. As the table on the bottom left shows, margins for both Mutual Funds and Institutional were in line with our Q3 guidance. This year, for the first time, we have presented exit margins. We believe this gives a clear view on where we ended the year. Progress in 2025 will clearly be influenced by our client demand. In Mutual Funds, we generated positive net flows in the first quarter from, sorry, for each quarter from Q2 onwards. And the AUM in both Mutual Funds and Institutional combined grew by 6% year on year. This provides us with a really strong foundation to move forward. Now, moving on to Solutions. I've heard that you'd really like to understand this business better.
So what we've done is, on the far left, there is to provide a greater clarity on our mix. So while the overall outflows in insurance partnerships, principally driven by the Scottish Widows, our core Solution strategies continue to perform well, generating GBP 8.8 billion of net inflows. This business combines our actuarial, advisory, and investment capabilities to develop bespoke solutions for our clients based on their outcomes, and we typically see a higher level of average longevity here. The Solution's net operating revenue margin was 11 basis points, a little lower than our guidance, and our exit rate is expected to be much the same. So in summary, good demand across the breadth of our Public Markets business, and this is a cause for optimism. We will talk more in terms of how we stabilize the revenue in this business as part of our update later.
Moving on to Schroders Capital. Now, the most important aspect of our performance this year is the near doubling of the revenue contribution of the new business, which you can see on the table on the left. On the right hand, you will see that we generated gross fundraising of GBP 10.8 billion, 16% of our opening AUM, with particular good contributions from Private Equity and Private Debt. This said, our new business was flat at GBP 6.4 billion. We must do better in this. The net operating revenue margin for the business was 57 basis points, a little higher than we guided in Q3, and this was mainly due to the higher Real Estate transaction fees and the shift towards Private Equity that we saw at the end of the year. The exit rate going into 2025 remains the same.
The improvement in the revenue contribution from this new business is really important as we look to accelerate its growth, and again, we'll tell you more about that later in our Strategy Update. Moving on to Wealth Management. This business has again demonstrated excellent performance. Operating profit increased 15% year on year, and the segment now makes up 27% of the group's operating profit. As you'll see from the bottom left-hand chart, a large part of this growth is driven by the success of Cazenove Capital and our strategy to build out on business owners, charities, and high net worth individuals across the U.K. The net operating margin was in line with our Q3 guidance at 40 basis points, and we are exiting the year at the same rate. Moving on to expenses. You'll see that we've included our central costs on this slide.
This is really important because as we lean forward, our discipline on costs will be across our full expense base. In 2024, we focused on embedding better cost discipline across the organization. This, along with the restructuring measures we took in 2023, enabled us to keep our compensation ratio flat at 46% and contain the increase in expenses to less than 2%. This notwithstanding the inflationary pressure and the ongoing investment into our business. The bridge on the right breaks this down. We generated savings of GBP 34 million through our focus on costs and the benefits of the restructuring that we put through in 2023. This included things like the change of our technology strategy, our cloud technology strategy, and the relocation of our Wealth service center to Horsham. GBP 13 million of this was reinvested in the business, notably building out our Wealth technology platform.
The remainder of the benefit was offset by the effects of inflation of GBP 58 million and those costs that are linked to our higher AUM. In 2025, our focus is on driving further cost efficiencies and delivering sustainable operating leverage. I will come back to you on this as we go through our cost and go through our cost guidance for 2025 as part of our Strategy Update later. Now let me talk you through our capital position. Our capital surplus over the regulatory requirements and the Board established allowance increased from GBP 551 million to GBP 838 million. This is principally due to our Tier 2 bond issuance, which provided us with increased financial agility, capital diversification, and additional liquidity. Importantly, given that we are regulated as a bank, the surplus will enable us to absorb the impacts of Basel 3.1 anticipated in 2027.
Important to note that a significant portion of this balance will be used organically to invest in the growth and accelerate Schroders Capital and our Wealth Management businesses, whilst recognizing that our capital generation will reduce during this transformation period. I will talk more about our disciplined capital approach as we get to our Strategy Update. Clearly, it's a really important part. So to conclude on our 2024 results, we generated operating profit of GBP 641 million, down 3% compared to our prior year. After taking into account our non-operating items, our profit before tax was GBP 558 million, up 14%, supported by the absence of any restructuring costs this year. In light of these results, our Board has proposed a final dividend of GBP 0.15 per share, and that would provide a total dividend of GBP 0.215 for the year.
Now, before I finish, I wanted to focus on some forward-looking changes that we're making to our financial reporting framework. As I mentioned earlier, one of my commitments to you is to bring simplicity, clarity, and transparency to our financial reporting and disclosures. You've told us that the way we present our results is not intuitive or consistent with our peers. So going forward, we'll be providing a clearer and more standardized approach to help you track our progress. There are three key changes we're making to our reporting framework. Firstly, simplifying the way in which we represent our operating profit. We are simplifying our statutory profit to include all costs with operating expenses. We will separately report an adjusted operating profit measure that excludes acquisition-related costs and one-off items to help you understand the ongoing operational performance of our business.
You'll find more detail of this in your data packs. Now, we've purposely left the year-end results in the current format to enable you to manage your models, but we will report on the new basis from the half year. Secondly, in Q1, we will be providing greater clarity and granularity on our AUM flows and margins. This is to help you understand the different components of our business and our business dynamics, and principally to reflect how we engage with our clients. The breakout of our core Solutions business that I showed you earlier is a great example of that. We'll provide detailed reconciliations of the changes in both of those into our data packs that will be delivered to you in May. And finally, as Richard mentioned in Q3, we are committed to providing regular updates, AUM and flows on a quarterly basis.
I hope that gives you useful insight into our 2024 results, and I'll pass back to Richard as we open up for some Q&A.
I've got my pad at the ready, Meagen. So this is going to be super frustrating because I'm going to ask you all not to cover questions related to strategy because we're going to come back to that. So we can just focus on 2024. That would be great. There you go straight away, actually. So can I just say for the benefit of everyone in the room and online, usual things apply, name, where you're from, let me know three questions. David, for everyone online, is behind the wall at the back of the room moderating what we can see through Zoom.
I am going to start in the room, and because Hubert has his hand up like super quickly, I'm going to go straight to him.
Great, thanks. It's Hubert Lam from Bank of America. And thank you for the new disclosures. We really appreciate it. I guess I'll stick to the results questions. First, on the fee margin for Mutual Funds, I think the exit rate is about two basis points lower than what you reported in 2024. Maybe you could explain what's driving that. I assume it's mixed, but could there be potential for further downside as we get through the year? The second question is on NII assumptions, Wealth Management. How should we think about that with a base rate expected to come down further? And is that going to present further potential pressure on margins, even though the exit rate seems like it's unchanged?
And lastly, can you explain also what you all look for the JVs and associates with what's happening in China? Do you see that stabilizing or growing going forward? Thank you.
Sorry, this is really hard for me because I sort of want to jump in on some of the CFO questions. So I'm going to let Meagen do the first two, and then maybe I'll just deal with the third one now, right? So on the JVs, we're going to talk about them a lot more in the strategy session. So I'm going to hold that question, Hubert, right? If we don't answer it, I'm sure you're going to ask it again anyway, but let's just hold it. Meagen, do you want to take the first two?
Yes, sure. Thank you for your question.
So just starting on the mutual fee margins, as mentioned, our mutual fee margins have really dropped off as a result of a change in our client appetite. We've seen a change in mix in two places. One has been a move towards more fixed income products with high interest rates, and secondly, as we've seen clients' appetite move away from some of our local strategies into the global equity strategies, so we have guided on that as the exit rate as well. I'll leave it to you in terms of where client appetite and interest rates will go in terms of the market. In terms of the second one, net interest rates inside our Wealth business.
Now, Cazenove's Wealth business, in terms of earning interest, passes through most of the benefit of any of our interest earnings, where they hold on to about 50 basis points in terms of their interest earning in that business. And we really don't think that is pretty stable. We don't anticipate any major impact on that business. Clearly, as clients move toward more risk-off, that is a great opportunity for us to generate more income on our equity products, but we don't see any impact on that business for that.
Next.
Good morning, Bruce Hamilton.
We didn't answer the third one. Sorry, we didn't answer the third one.
I did. I did. I think we're going to come back to it.
Sorry.
So yeah, Bruce Hamilton from Morgan Stanley. Just a quick one on the, and again, thanks for the improved disclosure. That's great.
Comp to revenue is something that historically you've looked at, and I suspect you may talk about this in the Strategy Update. But where was that number running? Because obviously, there's a balance between talent retention and trying to drive efficiencies. So is that something you're completely stepping away from, or what was the sort of number in 2024 and any way to think about 2025?
Yeah, I'm happy to answer that one. So thanks, Bruce. So as we have guided in our RNS, and we'll speak later about, we're looking at total costs going forward. And therefore, our guidance is really looking at a cost-to-income ratio as our key guidance for market. It's really important to bring that discipline into the organization in terms of how we think through costs.
Clearly, from a comp to income ratio, we had a 40%, 40.4% cost-to-income, 46.4% cost-to-income ratio this year, which was consistent with prior years. Talent is massively important. We will consider investing in talent, and as we go on to the strategy section, we will talk about some specific actions we're taking to acquire some talent in specific areas, so yeah, no issue on talent, but in terms of cost, we will guide on a cost-to-income ratio going forward.
And Bruce, just to add to that, we're committed to getting a grip on costs, right? And actually, if we try and split out non-comp to revenue ratio, it creates some perverse outcomes about where we want to do things, so one of our firm beliefs is that we should get the best people doing the things that we can at Schroders, whether that's internally or externally.
So we want a little bit of freedom as we go through this transformation plan to actually manage our cost as a whole, not actually in components. We're going to go right to the back, actually, first, because I'm sorry, Angeliki, I had my glasses on. I can't see you that far away with the Zoom, sorry.
Good morning, everyone. Mandeep Jagpal, RBC Capital Markets, two for me as well. I'll try to stick to just the results. First one on margin, slight margin increase in private assets versus guidance. Could you provide some details on what the drivers were there? And then on capital, how much of the surplus of GBP 838 million is actually available to be utilized, for example, investing in the business, distributions, and M&A?
Take those, Meagen.
Yeah, I can take both of those.
Firstly, on guidance, sorry, on the margin guidance on the Private Markets business, we saw that rise likely towards the end of the year, ending on an exit rate of 57 basis points. That was largely driven to a switch in our Private Equity mandates, where we've seen the runoff mandates exiting at a lower rate than the new business that we'd obtained in Q4. That remains our best source in terms of margin in that business. And then secondly, in terms of capital, we will talk in the Strategy Update in terms of a significant amount of that capital that we will be investing organically in the growth of our business. As I mentioned, that is the amount that sits outside and above our regulatory hurdles as well as our Board early warning signals. So it's all available.
All surplus.
All surplus.
Angeliki.
Angeliki, you've broken the microphone.
Good morning. Thank you. This is Angeliki Bairaktari from JP Morgan. A question on Schroders Capital flows, please. Thank you so much for giving us the gross flows together with the net. As we sort of look forward, do you expect to see more fundraising? And I was wondering if you have an update on the LTAF initiative that you have been pursuing over the past year, if you can give us some color on sort of how many flows the LTAFs have actually collected. And second question with regards to the Wealth Management business, just a follow-up on the NII question. We have seen NII flattish despite the drop in interest rates, and I hear you on the 50 bps that you retain.
But in terms of sort of the different dynamics within that business, what are you seeing in terms of deposit flows versus investments in gilts versus perhaps investments in riskier assets at the moment?
Maybe actually, Meagen, why don't you start off on the growth flows? And I might, because I have the benefit of asking the audience, we've got Georg and Mary-Anne here. So we might go to Georg just to touch on the LTAFs and then Mary-Anne just to touch on what we're seeing with the flows in Wealth.
Sure. So just to be clear, it was gross flow in our Private Markets business. Our gross flows in the market fundraising was GBP 10.8 billion, as we mentioned. The good news there is we have dry powder of GBP 4.2 billion, which is still available to be deployed. We don't have any issues in deployment.
That is a very healthy and healthy deployment rate, and we are above market averages on that. In terms of where we're seeing the flows, our Private Equity business has done extremely well. It's well positioned in the market, which Richard will pick up later in our strategy sessions, and we continue to see good flow into both Private Equity and our Infrastructure Debt products.
Georg, you have to just come onto the stage. Maybe just give you a minute on where we are with the LTAFs. I want everyone online to see what a good-looking chap you are.
Thank you, Richard. So Angeliki, briefly on the LTAFs. We've launched LTAFs in several areas. You might have followed the news on the venture capital side. We've been awarded a mandate between BBB and Phoenix, which is GBP 500 million committed and starting to invest soon.
It's currently being built, but it's been publicly announced. We have built two LTAFs again in the joint venture with Phoenix through Future Growth Capital. They are both approved now and starting to be ramped up with the seed capital from FGC. I think we've said publicly that we're expecting this to become GBP 2.5 billion, but they're still small at this stage. Then we've launched an LTAF via our Solutions business, Climate+, which is above GBP 100 billion, roughly now. Then lastly, there is an LTAF on the renewable energy side, which is approaching GBP 200 million roughly.
Mary-Anne, did you want to just touch on how we're seeing cash and gilts flow?
Sure, absolutely. I think I might touch on that. Hopefully you can hear me, yes. On the gilts, we are still, Angeliki, we are still seeing some interest in the gilts.
But I think one of the two major points really to note, one, they're incredible. It's a sign that we are being very successful in our ability to attract entrepreneurs. You'll remember those of you who were here at our sort of Wealth in Focus Day that we said we wanted to expand that franchise beyond London and the Southeast. And we've done that very successfully regionally. And those flows tend to come when entrepreneurs exit their business. And typically, those entrepreneurs that exit the business are actually quite risk-averse. They need time to reflect. They need time to think about what they're going to do next.
Having that first conversation to say, just invest in a gilt for higher rate taxpayers. It's actually a very useful and a very attractive way to sort of hold your money until we decide how to structure your assets, what else matters. But what we are seeing as well is year on year, we are converting the previous year's gilts, if you will, into more risky assets as they then decide what their investment strategy is. I hope that's helpful. Thanks.
Angeliki, of course, that's central to our Cazenove business model. It's actually the fact because we're a bank, we can take large deposits and move them from cash to gilts to risk assets pretty seamlessly. So it's a big differentiator for us, Mary-Anne.
It is, as is our sort of sophisticated financial planning advice where we're talking to clients about how they want to structure their assets going forward.
Thanks, Mary-Anne. Where were we next? David, are you going to ask me a difficult question?
Let's see. David McCann from Deutsche Numis. That shouldn't be too difficult. These are obviously backward-looking at this point. Again, echo the comments on thanks for the new disclosure. That's really helpful. Just on one of the new pieces of disclosure, the segmental information you've given us on the Solutions business, are there any major differences in the revenue margins between those categories you've outlined? That would just be useful to know. And then second question, I guess slightly surprised, there was no new share buyback announced today. So maybe just your thoughts on why you didn't take the opportunity to, I guess, refresh and reload that program. Thanks.
On the second one, again, hold that question, David, because I think we're going to be talking about how we might use our capital in the strategy section. So I'm sure you will come back to me if you're not convinced at that point. But Meagen, definitely take the first question.
Sure. Thanks, David. The way we've broken down our Solutions business, there are really three components to that. There's the Multi-asset funds, which generally get a revenue of about 30 basis points. And then there's the OCIO components, the fiduciary management, where we generally come out below 10 basis points in terms of those broader mandates, large-scale mandates like Tesco's.
Mike.
Thank you. Mike Werner from UBS. Meagen, I think you mentioned something when you were talking about the capital surplus about the potential impact in 2026 of Basel 3.1. I was just wondering if you could just give a little bit more color just to see how we should think about that going forward.
Sure. Thanks, Mike. As you know, Basel 3.1 has not, where we're heading on Basel 3.1 has not yet been clarified. We're working really closely with the PRA and understanding nuances. And I think it would depend very much in terms of what we got on our balance sheet at that point. So it's very difficult for us to predict, but we do know we need to hold something. And that's really what we indicated.
Anyone right at the back?
Hi, morning. It's Greg Simpson from BNP Paribas. Three quick ones on my end. Firstly, can you provide any color around flows by client geography, particularly in Mutual Funds, U.S. versus Asia versus Europe?
Secondly, there was a comment in the release that year-to-date flows are modestly positive. Can you provide any color? Has that positive momentum in M utual Funds last year kind of continued into this year, or has that slipped back? And thirdly, just any comment on impact in Wealth from the budget, any behavioral changes given in theory some changes to pensions and inheritance tax? Thank you.
So Meagen, do you want to take the first one? I'll take the last one.
Sure, yes. If we look at our geographical split of flows, our Mutual Fund flows in Europe, where we have our SICAV, have been extremely positive. They were the big contributor to that GBP 1.3 billion net positive flow over the last year. Asia has been slightly muted as a result of our investor appetite, or not investor, our client appetite in terms of where they're wanting to position. They've moved out of some of those local strategies more into our core global strategies.
Greg, it's very interesting on the U.S. flows, Meagen. I mean, for the third consecutive year now, we've actually been in positive flow. All of those people who keep saying 40 Act funds are dead and everyone's going to be in an ETF, that is not our experience. Through the heart of platform, we are consistently generating really good positive flow.
Then the second question, just in terms of flows year-to-date and our comments on outlook, we've really focused there in terms of our Institutional business, where we've landed some large mandates, specifically the St. James's Place mandate, which was well documented in the press, where we've landed a GBP 5 billion mandate really off the back of our great equity and sustainability mandates. That's what we're guiding on.
Greg, I think in relation to the budget, I assume the question you're really talking about is the change in the non-dom tax regime. The great thing about our business, because we have Schroders Wealth Management that enables us to serve international clients, actually we haven't seen. I'm going to park the question of where people might live. We haven't seen a mass exodus of money flowing out of our business in Wealth Management, actually far from it. So I'm not going to get into where they might live, but I can assure you that the impact of the budget on us as a business managing high net worth individuals' wealth has not been impacted. Any more in the room before I go online? So David, do we have any questions online?
There's no questions so far, but there's a Q&A button in the top right-hand corner of the screen. So if you've got a question, you can type out the question, add your name and where you're from, and we'll read it out for you. But there's nothing at the moment.
Well, if there isn't anything, we might have to pick those up in our next Q&A session, actually, because I think we're going to get a break now. We're going to give everyone. I know you've only been in the room, but conscious the next session is quite long. I deliberately wanted to give you 30 minutes to meet with the ExCo. They have not been scripted. They have no talking points. It is your opportunity to go and ask them any questions that you want and get a really honest answer. So with that, I'll be back in the room at just 10:10 A.M., and we'll carry on with the Strategy Update. Thanks a lot.
Welcome back, everybody. I've been told while I was having coffee that this is what you're really all waiting for, and if you wonder why I was just over there, I was looking at my friend Pete, who manages all the AV, and he was giving me the thumbs up that everyone had managed to rejoin us online. Our Strategy Update this morning, we're going to describe how we're going to drive profitable growth here at Schroders. I'm going to build on my opening comments, but let's be really clear about what the problem statement is. We've invested significantly in this business over the last few years, but we have not delivered the shareholder returns that we would want. Now, frankly, is the time to fix that. The first thing I want to do is look at the three keys to our success.
So celebrating and building on the huge strengths that we've got in this business. We're unashamedly active in everything that we do, and we spent the last few years, as I said, building our capabilities so we remain relevant for clients. And secondly, we've got to be honest with ourselves about what needs to be fixed. Our business has become complex, costly, and a little unfocused. And thirdly, we need to act at pace to simplify, scale, and deliver the change that we need. So by the end of this session, we'll have set out what the plan is, a clear plan about how we're going to do this, and importantly, the financial benefits that come from that. You're going to notice a change in tone in what we're saying today. And above all, I want, under my leadership, this organization to be super client-focused, relentlessly focused on client outcomes.
And as I said, I'm leading from the front on this. But the more we can draw together the breadth and depth of our capabilities, the more we reinforce our reason to be here, the reason that active management is here. And as I said, now is the time for that. So first and foremost, I'm going to talk about our key strengths. Now, I hope you recognize the things on the left-hand side. I touched earlier on the brand, our geographic footprint, Wealth, our performance, and our partnerships. I'm going to touch on each of these. I love this slide. Everyone knows we've got a great brand. I don't think everyone realizes how great it is. So this is the result of the NMG survey for the seventh consecutive year. We have been rated the fifth most recognized brand in asset management.
Just look where we are relative to our peers. Importantly, look where we are relative to our European peers. The strength of this brand gives us a high-quality calling card with current and future clients. It reflects our integrity and the trust that clients place in us. You can't replicate that. You can't buy it. It's unique. Second, let's talk about the strength of our franchises in the U.K., Europe, and Asia. So this chart shows that we're really well positioned in the areas of greatest growth, particularly in Asia-Pacific, where investable wealth is growing at its fastest rate. And then there's our Wealth Management business. So we have a top four market share position in each of the subsegments of Wealth. And given the fragmentation of the market and the strength of our proposition, there is plenty of headroom for us to grow.
So I'm going to go further and say that our investment capability and wealth expertise combined, as I said earlier, are significant competitive advantages for us. Our Wealth business benefits from our investment capacity and capability in both Public and Private Markets and from the economies of scale that you get from our corporate infrastructure. I talked about performance. So let's just reflect on the 20 years of history that we have in building successful partnerships, whether that is gaining access for our shareholders to high-growth markets in China and India, and I'm definitely going to come back to those before the end, or accessing the 25% of the retail banking market through our joint venture with Lloyds. These are hugely valuable assets for us. But let's turn to arguably what we need to do better. Firstly, addressing the headwinds in Public Markets.
Over the last few years, we have been running really hard to stand still. Net outflows are, of course, explainable in part by the broader macroeconomic events, higher interest rates, higher concentration in global markets, and the competition from cash, of course. So we continue to live with that margin erosion. But let's be really clear, that is not caused by the per-unit price declining. It is caused by the shift in our client demand. And as people have moved into fixed income, we have seen margin erosion. But we've also spread ourselves too thinly. We can't be everything to everywhere and everyone. And our job is now to focus our capital, both our people and our financial resources, where we know we can win. And this is going to reverse the revenue decline that we've been experiencing in recent years in Public Markets and stabilize that business.
So in Schroders Capital, again, I want to be really clear, we can't do everything. We've built expertise in discrete specialisms, and that is where we're now going to focus so we can drive flow and operating leverage. And I think as we really introduce those differentiated investment opportunities to our clients, there is huge opportunity. I'm going to give you a really silly example. So today, only 7% of our Public Markets clients buy Schroders Capital product. That is a huge opportunity to increase that by even a small amount. But we've been slow in committing our own balance sheet for co-investment, a key aspect of creating alignment with our clients. And as Institutional buyers become much more specialized, we need to match that capability in our Client Group. Both of these are totally fixable. And thirdly, we need to be honest about our track record on acquisitions.
We've undertaken all of these acquisitions in the last 10 years and more, and yes, they have broadened out our capabilities, and yes, it's an important part about how we have grown Schroders Capital, but we know that many of them have not delivered the financial returns that we had hoped for. Now, some of this is because the market conditions fundamentally changed. I never expected the gilts crisis, but going forward, we have to be much more disciplined about assessing what these assets need to deliver and how they do that because everyone has to justify their place in our portfolio, so we're doing work to understand how to improve the profit trajectory of each business where we believe there is more to be done, and in some cases, we're already repositioning them. Let me give you a couple of examples.
So BlueOrchard has now been repositioned to be a semi-autonomous specialist impact investor with a direct route to clients. And that's because their impact investments are too niche to put through our general sales channels. Schroders Greencoat, we're making less dependent on the listed fund market, creating higher returning products that broaden the distribution capability and actually focusing on international expansion. Importantly, our client lens gives us confidence that in the long term, the opportunities for renewable infrastructure are huge. So when thinking in the future about acquisitions or indeed organic investments, we're also being much more deliberate about where we place our capital. Meagen is going to cover this in a minute. She's like super passionate about it, just to warn you. So next, cost and complexity. We have invested for growth and built an enviable business infrastructure.
But as I said, we've become more and more complex operationally. And I'm going to give you a silly example. Why does this business need 5,500 suppliers? So Meagen is going to talk you through the transformation plan in detail and suffice it to say, there is a massive opportunity to simplify and scale in the areas where we need to match client demand. And actually, we have the ability to control our costs much more because they're in our direct control. This is my least favorite slide of the presentation, and I suspect it's the least favorite slide for our shareholders. We've already decided to make changes to executive remuneration to tie our reward much more closely to EPS growth. All of the executive team in the room today now have long-term incentive plans in place, which align their compensation back to shareholder returns.
I hope what I've said so far has given you a sense that we're being realistic, but also suitably self-critical about the challenges that are facing us. What are we going to do about it? Our focus is on fixing the fundamentals in the business over the next 18-24 months, creating the space and, importantly, the optionality for us then to move forward with delivering accelerated growth. As we address these challenges, we won't lose sight of why we're here, and that's to serve clients. We have refreshed our purpose: creating prosperity together. Most important word on this slide: together. It's a strong signal to everyone at Schroders about how we need to work together to deliver the best outcomes for our clients.
But it's also a very important signal to our clients that it's about how we work together with them and other partners in the investment ecosystem to really respond to their complex problems. So what we do at Schroders is we think from the client out back into our organization. So what's the client drivers? And we look at that through multiple lenses. We, of course, look at it through a geographic lens, but we also use these four segments: Wealth, Long-Term Asset Owners, Insurance, and Pensions. And this is making sure we bring the full knowledge and experience of the Schroders group into how we position what is needed in the marketplace. Understanding client needs in each segment allows us to spot common investment themes and tailor our offer accordingly.
You can see there are three investment themes which are tightly interwoven to how we see the demand across these segments. So Wealth is the segment that actually we see growing fastest. It's got a compound growth rate of 7%. Actually, in Asia, that growth rate is even higher at 10%. Of all of these segments, it is our largest. It's where we have most revenue and most of our clients. They're responding to growing demands for diversified portfolios that balance income generation. They are navigating huge regulatory uncertainty, huge macro change, demanding personalized solutions and increasing the social priorities that we need to place on products because that ultimately is what the end client in Wealth needs. So Schroders is super well placed in this segment.
Our experience gained from our own Wealth business, again, as I mentioned earlier, this is why we think there's synergy in the group. Our experience gained from our own Wealth business really helps us to develop and refine our propositions in this space. Long-Term Asset Owners such as sovereign wealth funds and endowments are seeking access to effectively real assets. They're allocating capital to Private Markets. They're navigating the impact of sustained high rates and central bank policies, which, of course, necessitate really strong risk management and informed investment selections. Insurance companies are facing the challenge of adapting for resilience, and they're seeking duration-matched returns and predictable income flows. They must address inflation risk and adapt to shifting demographics. Finally, Pension schemes. They face the dual challenge of securing stable income for retirees whilst managing long-term liabilities.
DC scheme consolidation, which we're likely to see here in the U.K., we've already seen elsewhere in the world. And what it actually does is it creates an opportunity for asset managers to respond to specialist need. We look at the proposals in the DB sector in the U.K. to move to run-on. It's a fabulous opportunity for members and sponsors to create mutually beneficial returns. So why have I just told you all of that? What I want to reinforce is we think about what are the needs driving from our clients that drive us to think about tightly interwoven investment themes that fix them. So return opportunities, income generation, and future proofing. Let me bring it to life.
Karine has spent the last few months with Client Group going through this process to build plans for each country through the lens of the segment and the investment theme. We now have a sales strategy and a sales plan for all of our Client Group, actually really focused on understanding what they need, our clients need in that market, in that segment, and delivering that through our sales channels. It's not just about increasing client relevance. It's actually about boosting our sales effectiveness. Let me transition from looking at our client lens and back into how we then bring that to life into our three markets, into our three businesses. On this slide, I'm going to give you an overview of the growth initiatives and cost efficiencies that we have underway.
I'll come back and give you more detail on these after you've heard from Johanna and Meagen. I wanted to show you them upfront and to give you a flavor of some of the more substantial actions that we have underway. In Public Markets, we're focusing on our market-leading capabilities. We are increasing accessibility to product, and we are driving efficiencies by looking at this business front to back. In Schroders Capital, we're focusing on those specialisms where we know we can win, being ready to use more of our balance sheet and building out a specialist sales team. We remain super alert to expanding our Wealth channel and, importantly, partnerships to grow that business. In Wealth Management, this is actually doing more of what we do really, really well today.
That means growing the number of senior relationship managers in Cazenove, advisors in Benchmark, as well as creating selective acquisitions as we have been doing over the years. Importantly, I'll talk about the changes that we need to make to the technology. Thanks to the new streamlined executive team that hopefully you managed to chat to most of them over the break, there is now clear lines of responsibility for delivering these initiatives, as well as right-sizing the cost base in a super disciplined fashion. This is quite a significant culture change for Schroders. Let's make this a little bit more concrete for you. On this slide, I've highlighted our key deliverables for 2025 because what we're doing today is outlining a three-year plan. I want to be really clear about what you're going to see from us in 2025.
Let me pick out a couple of these things. So in 2025, we will have taken out GBP 40 million from our cost base. We are simplifying the product range. We have already mentioned that we've closed more than 10% of our funds already, and we're looking to do much, much more. And that's about, by the way, not just saving money, but making sure our fund and product range reflects what client need is. And actually, we're evolving Client Group even further to make sure that that sales powerhouse can really, we can see the benefits of that. We can increase our return on marketing, and we get a clear line of sight into the client. So what does this all translate to in financial terms? So let's be clear about the overall aim.
That is to return this group back to earnings growth, starting gradually in 2025 and accelerating through 2026 into 2027. The most immediate contribution to this is to achieve GBP 150 million of cost savings between 2025 and 2027. And then if we turn to revenue, we're going to reverse the trend that we had and stabilize revenues by FY 2027 in Public Markets. In Schroders Capital, we're going to deliver cumulative GBP 20 billion of net new business with that growth accelerating over the three-year period. And in Wealth Management, I'm going to stick with our targets. They're already market-leading. So we're going to stick with 5%-7% growth in opening AUM per year. So collectively, these changes should enable us to reduce our cost-to-income ratio from 75%-70% on the new basis that Meagen outlined.
So let me now hand over to Johanna, because as a CIO, she's going to do a much better job of explaining why she's passionate about active management and why it's important to our future. Thanks, Johanna.
Richard. Good morning, everyone. Just by way of introduction, I've been at Schroders for 18 years now, and six of those I've been CIO. So I've really witnessed at firsthand how Schroders has been able to adapt to the evolving needs of its clients and also navigate through many crises. Now, active management for us is more than just alpha and beta. For us, it is a culture that permeates every single one of our three business lines. It is a curiosity that leads us to invest in innovation. It's a determination to do the absolute best for our clients.
It's also a strong belief that a forward-looking approach to the risks that our clients confront is absolutely essential. Now, in my 28-year investment career, I have to say it's never felt easy. Every cycle has presented its challenges. But we are confronted by an unusual set of risks today. For example, it is impossible to have a conversation with a client without talking about the record levels of index concentration. Today, 10 of the largest companies in the S&P 500 represent 37% of the index. The last time we saw this level of concentration was a bit before my time, at the peak of the railroad boom over a century ago. This matters because it means that a passive exposure to a market cap-weighted index now contains elevated levels of stock-specific risk, which in our view needs to be managed actively to be appropriately controlled.
More broadly, we've seen a dramatic shift in the macroeconomic environment. The rise of more populist policies is leading to higher debt levels, an inflationary environment, and protectionism. On top of this, our clients are facing regulatory challenges and disruption within their own industries. Now, against this backdrop, our clients continue to seek our expertise and advice. The right-hand chart illustrates this. In each of the past few years, our active business has seen GBP 120 billion of gross inflow. Clients allocate to Schroders because it has the people, culture, and performance to meet their changing needs. The focus on research and excellence, which our active approach implies, positions us as thoughtful experts whose knowledge can be pivoted to solve our clients' more complex problems and meet their overarching objectives.
So let me give you some examples of how we're working with our clients through the lens of those three investment themes that Richard introduced. Now, first of all, return opportunities. We're seeing strong demand for our global and international equities, which have seen net new business of over GBP 16 billion over the last five years as clients seek to benefit from global opportunities but are possibly concerned about the concentration of the indices. Our active stock-picking approach ensures that exposure to the mega caps is managed and deliberate, underpinned by our fundamental research. Schroders meets with 30 companies globally every day and produces 11,000 company research pieces every year across Public and Private Markets. Secondly, we've seen significant demand for our income strategies among our Wealth clients as populations age. Insurance clients are also naturally searching for strategies that deliver yield.
Initially, a few years ago, it was about reaching for yield in a world of zero rates. Today, it is about encouraging clients to move out of cash into strategies that can give them significant upside and inflation protection while still managing downside risk. We're doing this by combining bonds, equities, and alternative strategies such as insurance-linked securities and securitized debt. Finally, clients increasingly look to us to think about future proofing, as we're calling it. We have 270 portfolio directors, consultants, financial planners, solution managers, and strategists offering advice to our clients across our three business lines. This is obviously a critical part of our Wealth business and was also an important driver of our recent OCIO win with Tesco last year.
The strategic advice we offer is multifaceted, but embedding it in considerations on climate and sustainability in portfolios is a great example of how we can customize our capabilities to meet client needs. Many clients want to understand and be accountable for the climate risk in their portfolios, but they also need to meet their risk and return objectives and supporting them in solving this complex trade-off has led to some significant client wins, such as the St. James's Place mandate, which has already been touched on. Strategies such as renewable infrastructure with Greencoat are a great component for our Insurance clients as they seek to meet regulatory requirements or for our Long-Term Asset Owners who are looking to seize opportunities from the energy transition. Now, of course, central to everything we do is investment performance.
Richard mentioned earlier that I'll take you through the numbers in a bit more detail. Let me start with the less good news. Our three-year numbers are a bit softer. We've seen three-year performance fall to just under 60%, reflecting the fact that some of our absolute return-focused strategies struggled in 2022 when interest rates rose and major asset classes fell. The numbers are already rebounding. One-year performance is strong with 70% of assets across Public, Private, and Wealth outperforming in 2024. We're very pleased to see these results. Our five-year performance is unrelentingly consistent with 76% of assets outperforming in line with our long-term average. How have we achieved this? Active management is our sole focus, no distractions.
Our culture is built on fostering investment talent and ensuring the highest level of accountability for investment performance day by day, year by year, and basis point by basis point. So we are proud of the value that we deliver for our clients, and we remain fully committed to our active mission. Our focus on active gives us a clear purpose and sets the highest standards. In our quest to deliver the best solutions for our clients, we strive to continuously improve, sparking innovation and creativity. The extensive experience of our investors and the development of investment processes that foster resilience through difficult environments has never been more relevant in today's complex world. Our long-term outlook with a wide and diversified range of approaches gives time for strategies which might be out of favor to succeed and deliver.
Now, our investment teams couldn't deliver this level of focus without our partners on the business and the operational side. And I sometimes joke that Meagen's grip on the operational platform and on our business is actually what allows me to get at least a little bit of sleep at night. So thank you, Meagen, and I'll hand over to you now.
Thank you, Johanna. I'm really pleased you get a little bit of sleep at night. What Johanna has highlighted is that driving change in our organization is a team sport. It needs us to be collaborative, intentional, and meticulously planned. Today, I hope that we are giving you the sense that there's a commitment for change right across Schroders, and the potential we have to transform this business is enormous.
We have begun a multifaceted program that delivers these benefits over three years with two key objectives: simplification and scale, and the combined goal of delivering profitable growth. Firstly, simplification. We're simplifying how and where we do things, maximizing our synergies, leveraging our technology to improve productivity, and reshaping our organization structures. We'll be using our service centers more efficiently, and we'll be managing our product range. Secondly, scale. We're creating economies of scale by making better use of the power of our brand and our strategic supplier networks, and we're putting our resources and capital to work to scale in focused areas where we have differentiated capabilities and, most importantly, where we meet client needs. I'd like to highlight that these changes are focused and targeted. They're not a blunt cost-out instrument.
I've been asked many times today what percentage of headcount or percentage of costs we're taking out. That is not what we're doing. What we're doing is a focused transformation to ensure we free up our working capital and our resources to do what Schroders does best. So let me talk you through those changes in a little bit more detail. I'm sure by now that the message of our strong foundations has come across loud and clear. Now, what I'll be adding is my perspective in terms of our great infrastructure and our great people. I'm confident that we have the talented individuals front to back within this organization to drive us to success. Drawing on my perspectives as a COO, I've got three—I see three main opportunities across our infrastructure and operating platform to drive and create shareholder value.
The first is enabling scale, leveraging our new technology such as AI, data, and our distributed ledger. Our next step is to simplify and standardize how we do things, improving productivity so that we can maximize the value of the strong foundations that we've already put in place. Over the last 10 years, we've steadily been investing significant amounts in our operating and technology platform. That means we've migrated to best-of-breed applications like Aladdin or eFront on the Private asset side. We've modernized our technology estate and deployed cloud, AI, and data platforms like Snowflake. A great example of this is in our equities, our quantitative equity strategy in global equities. We've deployed a data and investment platform that allows us to operate those portfolios at scale and bring competitively priced alpha to clients at limited marginal cost.
Secondly, we are enhancing how we give our clients access to our investment expertise. We're an active manager, as Johanna has said, and by launching our European active ETFs, we'll provide a new form of distribution, which increases the convenience and accessibility to clients. We can now deliver our world-class investment capabilities in multiple structures at marginal cost and, importantly, at scale. In the industry, or as a transformation agent, we'll often refer to this as the COPE strategy. You create it once, and you publish it everywhere, allowing us to deliver at marginal cost. Finally, I believe we have an opportunity to better leverage our buying power, our brand, and our strategic partners. We don't need the variety of systems and suppliers that we've gathered over the last decade. We can simplify, scale, and deliver better outcomes at a lower cost point.
Now, I want to spend a bit of time, as I'm sure all the analysts are keen to hear, on the intended pathway to that ambition of GBP 150 million of savings. I would start by saying that we have completed a detailed assessment of our cost drivers, front to back and east to west across our business. We have used this to design a transformation program which is focused and considered all our commitments across the business. Business risk, our talent, and maintaining good investment excellence is at the core of what we're doing. We've already taken action, which has delivered GBP 20 million of run rate savings in Q1 this year. This included streamlining our management team, establishing a transformation office to ensure we can hold people accountable, and resizing some of our corporate functions.
The largest impact of this change was on our technology function, where our development spend has been refocused to areas where we want to grow and where we know we have differentiated technology capabilities. The remainder of the targeted savings form part of a detailed transformation plan that extends over the next three years and covers the two main themes. Firstly, simplification and scaling of our business process. There's an opportunity to simplify our organization design, rationalize our product range, and maximize the synergies across our service centers. We expect these activities to generate GBP 85 million of savings. Secondly, we are leveraging our buying power and our strategic operating partnerships. We will reduce our extended supplier network, and we will work with our strategic partners to generate savings of GBP 45 million. This program of work will be delivered over the next three years and will cost us approximately GBP 200 million.
The transformation spend is weighted to the first two years of the program, and the savings accumulated over the three years in approximately equal proportions. This gives us a payback period of around two years for our shareholders. As I said earlier, our focus is on total costs, and in building greater cost efficiency into our business, we will deliver an operating cost-to-income ratio below 70% by the end of the full year 2027. This is subject to normal market conditions. Now, let me come back to what that means for 2025. We expect that these initiatives will generate GBP 40 million of savings in 2025. We've already made the GBP 20 million of savings, and assuming stable markets and FX, we're budgeting on an improvement of our cost-to-income ratio, including our central costs of 1 basis point.
I want to be clear that delivering these changes and bringing greater operating leverage to our business will not be done at the expense of our client experience or the growth of our business. It's about focusing our resources and our capital on what Schroders does best. So let me highlight, I'm sure you're all thinking, how is this achievable? Schroders has a remarkable track record in our ability to deliver across large-scale transformation programs. Many of these have been done in conjunction with our strategic partners. Most recently, the transformation of our Wealth business, in which we delivered on time and on budget. We relocated a substantial number of roles from our Zurich center to our Horsham service center, delivering GBP 11 million of savings to that business.
Really importantly, throughout that journey, we continue to grow our Wealth business with 15% AUM growth in 2024 and the continued acquisition of high-value client franchise, like the Whitley Asset Management acquisition, which we managed to complete onboarding this last weekend. I'd like to close with emphasizing our commitment, and as Richard said earlier, my passion around capital discipline. We will bring further discipline to our capital allocation across both OpEx and CapEx to drive improved shareholder returns whilst continuing to invest in the business and build out our capital base. We've introduced a more disciplined capital assessment process, which looks at capital through the lens of return on tangible equity, ensuring that our returns exceed our cost of equity and deliver profitable growth for our shareholders. As a reminder, under our capital framework, which Richard set out last year, we allocate capital in three ways.
Firstly, to drive profitable organic growth. This includes the investments which Richard alluded to earlier, and we'll pick up in more detail, investing in our sales capabilities and our allocations of up to GBP 500 million of seed to co-invest with Schroders Capital to accelerate the growth. Secondly, through inorganic investment. A great example is the small acquisitions like the Whitley example I just mentioned. And finally, through dividends to our shareholders. Our capital base supports our growth ambitions while returning attractive dividend yields to our shareholders. We'll look to hold the dividend at its current level over the next few years as we bring the payout ratio towards 50% of our adjusted operating profit. So to summarize, our transformation is a team effort, front to back across Schroders. It's not about a blunt cost-out target, and it's not about pursuit of scale at the expense of our investment excellence.
It's about focus to deliver what we do best and that meets our client outcomes. As a reminder, we will deliver three key benefits that underpin the strategic objective of growth. One, cost savings as we embed the operating leverage to scale. Two, discipline in our resource and capital allocation as we ensure we can grow our shareholder returns. And three, a renewed focus and energy, a cultural change to build the fitness that Schroders needs to drive the business forward. Now, I'll hand back to Richard, who will talk more about how this transformation will benefit our clients.
Thanks, Meagen. So I'm going to give you a brief rundown of the three businesses and why I believe we can succeed and where we're going to focus our efforts.
Now, I've got about 30 minutes to go through three businesses, so that means I'm going to go at a fair pace. There's a lot, actually, that I would love to cover, so we're going to find the right opportunity in the coming months where you can spend time with the CEOs of those three businesses to understand them in a bit more detail. Now, let me start with Public Markets. And I think it's interesting, isn't it? It's been a long time since we've spoken about Public Markets. And on reflection, the language we've used, that I used, of pivoting away, sorry, pivoting towards Private Markets and pivoting towards Wealth may have left you thinking we were moving away from our Public Markets business, or that we were a little embarrassed by it. Far from it.
This is a well-established, highly profitable, and highly cash-generative business whose contribution to our group is fundamental, so let me begin by building on what Johanna said about why Public Markets still has a huge growth potential and how it relates back to those three investment themes, so we've got nine capabilities shown up here on this slide, four in equities, four in fixed income, and we have Multi-asset and Solutions. These nine capabilities actually account for 85% of our Public Markets revenue. They sit right at the intersection between where we have world-class capabilities and where there is client demand. Of course, they represent not just what is vogue at a point in the cycle. These are where we see long-term structural growth opportunities, so at any point, they're not all going to be in flow.
They're not all going to be the highest performers, but they do have three things in common. Firstly, they are spearheaded by exceptional investors who cultivate and lead brilliant teams. I've shown you my favorite slide today. I'm going to give you my favorite statistic. These nine teams represent 4,300, 4,300 years of experience across 250 investors. Ben here in the investor relations team pointed out that actually the pyramids aren't that old. We don't have any investors, by the way, who are that old. But the second thing they do is they deliver investment performance over the long term. They are true to label. They deliver client returns, and they're the returns that clients expect thanks to really clear investment philosophies and processes which are robust. In today's world, how refreshing to have something that actually does what it says on the tin.
And thirdly, they all provide solutions that aren't easily replicated by passives. They provide essential building blocks for client portfolios. So the need to harness return opportunities on the left-hand side of this chart, we're actually seeing mainly across our Wealth, Pensions, and Long-Term Asset Owner segments. And that is being mainly met by our equities team, as Johanna mentioned. And let me just run through a few of these just to give you a flavor of why we know these are world-leading capabilities. In global equities, where clients face the index concentration Johanna mentioned, our global equity team led by Alex Tedder has gone from strength to strength. Our fundamental, thematic, and quantitative equity products are all contributing to the growth.
Actually, in the last six months, we've won mandates where people are moving back out of passive because only active can fix the complex problems that they're facing. The value investors have been. It's been a challenging decade, hasn't it, for value investing? Many of our peers left the market or they changed styles. We backed our value team, and I'm really proud of the fact that we now have one of the largest dedicated value teams outside of the U.S. This team is pretty central to the St. James's Place mandate we mentioned, which I'm going to talk about in just one second. While U.S. equities have been the best-performing region in 10 of the last 14 years, let us not forget that in the previous 20, the entire story was emerging markets.
Return opportunities are not constant, and our emerging markets equity team and our Asian equity team are further great examples of us sticking with winning teams through the cycle. And of course, this means we're right there to ensure we can capture opportunities for clients when they arise. So our credit teams are really fixing the need for income products, particularly in the Wealth segment, and they have captured the rebounding sentiment since the bear market in 2022. U.K. and European credit, for instance, have raised in excess of GBP 9 billion in net new business in the last two years. We're incredibly proud of the European credit team. That is a dedicated team of 10 investors led by Patrick Vogel, as well as our global unconstrained team and our U.S. team.
Whilst emerging markets are a little bit out of favor, our team of 16 individuals with an average of 17 years' experience between them are delivering market-beating returns with a balanced approach to risk. Our Multi-asset and Solutions team, of course, build portfolios that clients need around future-proofing. This includes the outsource models to support clients with investment and governance needs. We've seen this particularly resonate in the U.K. with Defined Benefit and Defined Contribution schemes. Our core Solutions team, led by James Barham, really is creating outcome-based solutions for clients through fiduciary management and outsource CIO services. In 2024, we delivered more than 25 fiduciary management mandates, and there is a strong pipeline as we come into 2025. We need to position resources in our Public Markets business behind these nine world-leading capabilities where we know client demand is growing.
The natural next question is, what happens to everything we do that is not on the slide? Well, hopefully by now you've worked out that my starting point is clients. So we're not going to do anything that impacts the client franchise. But what we are going to do is to take our incremental resources, and we're going to put them behind these nine capabilities. And that includes taking 80% of our sales effort in Public Markets and focusing it on these nine capabilities. So I mentioned the St. James's Place win. Let's look at. Actually, I want to give you a client example of how we bring our Public Markets business to life. This win was in the news fairly recently. And from April, Schroders is going to manage the GBP 5 billion flagship Global Sustainable Equity Fund.
The portfolio is blending our market-leading Global Sustainable Value and Global Sustainable Growth strategies together to produce a balanced and highly active portfolio. Importantly, the fund actually meets the sustainability-focused SDR label, which was central to St. James's Place's demands, and I have to say, we wouldn't have been able to achieve that without a fantastic effort from our policy, governance, and sustainability teams, so this example actually shows where we think the future of Public Markets, our Public Markets business sits, and the growth that is going to be driven behind it, meeting client needs with market-leading investment capabilities pulled together, but given the amount of time I read in the newspapers about the growth in passive destroying our business, I wanted to share a few concrete bits of evidence to refute that claim.
Despite the headlines, active Public Markets remain large and are expected to grow by 2027 to GBP 72 trillion. That's across all asset classes within Public Markets. Active Public assets account for half of global AUM and 46% of global revenues, and what I find really interesting is that the flows between active funds are two and a half times higher than the flows into passive funds, so there is, and there will continue to be, a huge opportunity with this market for us to address, and of course, winners are going to have to be excellent at delivering investment performance and delivering client service, and that, of course, is what we do. Our Public Markets business has the scale to reach clients around the world and the diversification to ensure that we can remain relevant to clients at any point in the cycle.
We are diversified by geography, by asset class, and by our client segments. And Meagen outlined this morning the trends that are impacting our Public Markets margins and why these are decreasing. Our margins will actually reflect what our clients demand. So that's the business as it looks today. So let's talk about what we're going to do that is different as we back winners and broaden client access. So our target is to stabilize the downward trend that we have experienced in revenues by FY 2027. And we're going to do this by making three changes. You're already getting insight into how I think, by the way. Three businesses, three actions, three changes, right? So you'll hear the common theme as we go through the rest of the morning. Firstly, we're absolutely putting our resources, as I said, behind those nine market-leading capabilities where demand is growing.
What does that look like? 80% of our sales efforts focused across markets on those nine strategies. And this is also where we're going to think about our innovation and our investments. Our efforts on innovation will, again, think about how we create more client resilience and focus our outcomes on these products. Second, you've heard several times about launching active ETFs in Europe. That is about increasing client access. These ETFs are going to focus on the strategies where we can deliver at scale, such as global equities and fixed income. The recent creation of our Equity Solutions team will also allow us to better customize mandates at scale. And customization, as you all appreciate, is becoming increasingly important for our Institutional clients.
We're now able to package the capabilities that we mentioned in a much more bespoke manner, tailored exactly as we did with SJP to client needs. And finally, we're making changes to enhance the operating platform. We'll continue to simplify our product range. As I said, we have aspirations to do much, much more than the 10% we have done already. This doesn't just reduce operational complexity, but it reduces complexity in Client Group, allowing us to focus that sales effort in a much better way. We're aligning our operating platform from front all the way through to back and streamlining our research efforts to ensure our investment teams are operating both effectively and efficiently. And by making these three changes, we will deliver the target of stabilized revenues by FY 2027. Turning to our second business, Schroders Capital. Now, I have a little bit of a warning here.
So you all know our corporate brand colors are blue. But to make our differentiated Schroders Capital business stand out, we chose orange. It does mean the following slides are quite bright. One of the reasons, by the way, the lights are up is because when we turn the lights down, everyone had a lovely orange glow about them when I put this slide on the screen. But whether it is the need to address the duration-matched assets in Pensions and Insurance, or accessing the full liquidity spectrum from Private Debt within Wealth, or supporting the energy transition for Long-Term Asset Owners, this business has the ability to provide diversification of assets across all client segments. Schroders Capital now stands at GBP 70 billion of AUM. And as in Public Markets, our capabilities are structured in a way that addresses these key investment themes.
Whilst we operate in all four of the main Private Market pillars, our path to accelerated growth lies in focus and driving our flow into the areas of overlap between our specialist capabilities and the client themes. In addressing the need for diversification, clients look to our Private Equity business. Now, when I go out on the road, lots of people ask me about our Private Equity business. It is a world leader in small and medium enterprise buyouts. We're harnessing the transformation opportunities of high-growth businesses, and that provides a differentiated offering. It isn't a Blackstone. It's a totally differentiated product. And it allows realizations because those businesses are often purchased by larger companies or other Private Equity houses want to buy them. We have a strong and scaled Private Debt and Credit Alternatives franchise with GBP 24 billion of assets under management.
We offer clients flexible solutions across the liquidity spectrum. But we don't operate in the direct lending space. We forecast that asset-backed finance will grow faster than the more mainstream Private Debt offerings. We're well placed in these specialities. And for example, we run the world's largest catastrophe bond fund with GBP 2.3 billion in assets. And in Real Estate debt, the team now manages GBP 2.6 billion of lending. And Real Estate is providing future-proofing through portfolio resilience. Our focus is in growth areas such as hospitality and logistics. We manage our properties as I think you hope we manage our business, not just owning the asset, but understanding how we improve it. And we run one of the most extensive franchises in Real Estate across the U.K. and Europe. And finally, in Infrastructure, we've been operating in renewable energy for over 20 years.
Some of you will have heard me say before, I am very proud of the fact that we are the largest owner of renewable energy assets in the U.K. What I forgot to keep telling people is that we're the largest owner of renewable energy assets in Ireland, as well as the largest owner of renewable assets of wind across Europe, so let's talk about one specific client example. We've had a long and trusted relationship with the Ireland Strategic Investment Fund since they were the cornerstone investor when we did the IPO in 2017 of our European Renewable Fund.
But since then, we have worked really closely with them, and it became really clear to us that their key objective is to help the Irish government manage to the net zero target that they have committed to in a way that is commercial, targeted, and supports growth in the economy. So we worked with them collaboratively to enable them to be the cornerstone investor of our Schroders Greencoat Fund. And importantly, the launch of that new European fund enables us to keep working with them so we can respond to future opportunities as they arise. So let's zoom out back up as we did with Public Markets to look at the market as a whole. I don't think I need to tell you that the Private Markets constitute a large and growing revenue pool. But let me remind you nonetheless of the detail.
Private markets AUM is forecast to grow at 11% compound to reach GBP 27 trillion and 17% of global AUM by 2027. Private markets revenues are forecast to grow at broadly the same rate, and the growth opportunity therefore is pretty clear. That's why we've been positioning Schroders Capital to capture that growth opportunity. You can see here that over the last five years, we've grown Schroders Capital AUM at 15% and revenue at 16% compound, respectively. And that's been achieved through both organic activity. We've actually raised GBP 50 billion of gross fundraising, averaging 21% of opening AUM. But of course, we've also broadened our capabilities through selective acquisitions. So while this percentage on the face of it looks good relative to the industry, we're absolutely going to improve that gross fundraising and net new business further, which brings me on to the target for Schroders Capital.
So we are committed to generating cumulative net new business of GBP 20 billion over the next three years. And we're going to do this, funnily enough, through three levers. Firstly, we're going to invest in and scale the higher returning specialist capabilities that we know that we have, where we're differentiated and we can see strong demand. We know that our clients want to see us commit more of our balance sheet alongside theirs. So to that end, we have set aside GBP 500 million for seed and co-investment. That's significantly higher than the GBP 156 million that we have today. And to create capacity for this investment, we're already recycling resources by divesting of smaller non-core capabilities where we don't see the required levels of future client demand. A really great example of this is how we've restructured and streamlined our Real Estate business.
Secondly, we're driving flow into these targeted growth capabilities by building a specialist sales team, a team of up to 40 dedicated individuals who can accelerate our revenue growth, particularly in the Institutional channel. We recognize that clients have developed their own in-house expertise on Private Markets, and what we want to ensure is that we have specialist-to-specialist conversations. Building out that team is already underway. And finally, we're going to leverage the group's strong position in the Wealth segment and the growing demand for Private Market solutions. We have a huge competitive advantage over standalone Private Markets players because for the last 100 years, we have been working with the Wealth channel, and we know what clients need in that channel.
So in summary, we're going to take decisive action across Schroders Capital to increase flows over the next three years to achieve the cumulative net new business of GBP 20 billion. So turning now to Wealth Management. Let's go back to what the market needs. And the interesting thing about Wealth, of course, is the drivers are very different by client subsegment. So again, let me take you through our assessment of the drivers. So our family office and ultra-high net worth business clearly needs estate planning, philanthropy, and a real focus on intergenerational wealth transfer. High net worth individuals are looking for liquidity and exit advice, particularly as entrepreneurs. Our charities and endowments business are really looking for impact investing.
Cazenove Capital, our largest Wealth business, has GBP 62 billion of assets under management, is dedicated to serving all of these client subsegments with discretionary Wealth Management, financial planning, and advisory services here in the U.K. It's my second favorite statistic. The retention stats in this business are frankly phenomenal. In 2024, we had a 99% retention rate for both clients and advisors. I'm really annoyed with Mary-Anne that that wasn't 100%. Cazenove Capital is represented internationally, of course, by Schroders Wealth Management. That international presence allows us to cater for an international client base. Our affluent clients are typically looked after with comprehensive financial planning and investment services. Schroders Personal Wealth, the joint venture with Lloyds, focuses on the needs of this client base. Now, we've talked a lot about SPW in the path and the journey that that business has been on.
But it has made significant progress in 2024, both in terms of growth and profitability. It now serves over 55,000 clients. That's up 13% year on year. And actually delivers growth in average AUM per client of 10%. And finally, the advisor community requires platform services to support their clients efficiently and effectively. And Benchmark has established itself as a significant player in financial planning and now manages more than GBP 21 billion of assets on its proprietary platform. Their focus on technology and innovation is really allowing us to serve advisors effectively, enhancing their ability to meet their end client needs. So clients and advisors across these segments benefit from the collective resources of Schroders. Again, this is a plug for the Why We're Better Together point, which includes our strong operating platform and, of course, the deep asset management expertise.
Without that, we would not be able to provide the portfolio services to Schroders Personal Wealth or the model portfolio services that we provide to Benchmark, so in total, our Wealth Management business manages GBP 143 billion in assets, reflecting the strength and depth of our Wealth offering, so you can see each of these businesses, I'm giving you a client example, and I wanted to give you my last client example with you actually hearing from a client, in this case, Tania, who is the Finance Director of the RSPCA, and she's really going to tell you about how our approach helped them enhance their sustainability credentials and think about managing assets in a much more cost-effective manner.
The RSPCA is the oldest and largest animal welfare charity. The primary objective was to find a single partner to bring together Society and Pension Scheme investment assets to align and strengthen our responsible investment policy, increase efficiency, and reduce costs across both portfolios. The RSPCA has a 200-year history, and we've worked with the charity's team at Cazenove for 30 of those years. That history was really important to us, but the Schroders Solutions and Cazenove team stood out throughout the process. The Society Investment Committee worked with the Society Pension Scheme directors, and we identified a number of partners to have initial discussions with. We then reduced that to a shortlist and invited that shortlist of three to present to the joint working group. The robust and competitive selection process led us to a joint mandate with Schroders Solutions and Cazenove Capital.
Of particular importance to us was our desire to enhance the responsible investment policy across both portfolios, recognizing the different strategies of each. We felt that the Schroders Cazenove team demonstrated a real understanding and commitment. Uniting management under one roof, Schroders were able to offer a common operating model, streamlining processes and reducing our costs. This meant that we can direct more resources towards our purpose, inspiring everyone to create a better world for every animal.
So I owe Tania a big favor because what I wanted her to explain is why she loved Cazenove. So we went off and we asked her to shoot that video, and without any scripting, what she actually explained to you was the power of our group. Because Cazenove Capital and Schroders Solutions individually would not have been able to win that mandate.
I really wanted her to explain to you how awesome Cazenove was, but I think she's really done a good job of underscoring the power of our group. The U.K. is our primary Wealth market, where assets are forecast to grow to GBP 8 trillion by 2027, with the wealthier segments importantly growing fastest. While large, the U.K. market is exceptionally fragmented. In the high net worth segment, for example, the top 10 participants account for just 35% of the market. This means there is plenty of room for Cazenove Capital to continue to take market share. Our client relationships are so important in Wealth Management, where we continuously challenge ourselves about how we ensure our advisors are empowered to deliver exceptional service, because the client has to, and Wealth will always remain the top priority.
As a result of that focus, over the last five years, we've experienced compound annual growth rates in AUM, net operating revenue, and operating profit of 9%, 11%, and 12% respectively. Our ambition is to continue to grow. No pressure, Oliver, but maybe we can go a bit faster. We're keeping our historical targets, which is at the top end of the market already, of 5%-7% per annum growth. To deliver this, we're focused on three key strategies. Firstly, enhancing the Cazenove Capital senior relationship managers with extensive experience. Of course, growing, as I mentioned earlier, our Benchmark advisor network. Secondly, we'll continue to make selective acquisitions that complement our existing capabilities. I think within this part of the business, we've really demonstrated a successful track record in acquisitions and integration of business.
That really underscores our commitment to creating the right partnerships. Thirdly, we're going to upgrade our technology platform. In particular, we have to do a complete replatforming of Cazenove Capital. We'll continue to improve our SPW operating model as we've talked about in the past. In summary, I'm excited about the journey ahead for the Wealth business. As I said, I'm really looking forward to working with Oliver when he arrives. I know he's already got lots of ideas. Let me spend a minute or two on our JVs and associates. Hubert, I hope I'm going to answer your question. I've already touched on SPW, so I'm going to focus on China and India. In China, our fund management company joint venture has GBP 68 billion of AUM, and we established that back in 2005.
The performance of this JV, of course, reflects current market volatility. But let us not forget, China is still the second largest asset management market globally and still has the highest growing mass affluent sector. That is an awesome market. That joint venture gives us an important seat at the table of growth. India, 14th largest asset management market with the highest level of growth in 2024. In fact, actually, since 2020, it's grown north of 20% every single year. We own 30% of Axis Asset Management. It's established as a youngster. It was only established in 2009. It's a youngster by the Indian market terms. And it's already secured an eighth largest asset management company spot. And of course, the distribution is supported through Axis Bank, the third largest private sector bank in India with 5,500 branches.
So I think our joint ventures, Hubert, are a totally underappreciated source of value for our shareholders. In aggregate, we have GBP 117 billion of AUM through our joint ventures and associates, and they generate just under GBP 50 million of operating profit for Schroders. Now, if we take current multiples in India, because they are observable, and that implies a valuation of that company of about GBP 1 billion. So peer comps in China are a little bit harder to come by. But if we apply that same multiple to the Chinese FMC, that business is worth GBP 2 billion. So you've now been sat here for a long time. So let me summarize before we go to Q&A. I think this slide actually pulls everything together. I told you that I think Schroders is a tomorrow company, not a today company.
To make sure that we are, we're simplifying the business, we're removing costs, we're removing complexity, and we are driving focused and selective investments for growth. We know what we're good at, but we also know we can't do everything. We have a clear plan to return the business back to profitable growth, and that's supported by clear targets. Over the next 18- 24 months, we're going to simplify the operating model, drive efficiency, and build out our core areas of strength, enabling us to accelerate growth in the latter part of the three-year program. You'll be glad to know I have now finished, and I'm going to hand back over to you. Just as a reminder for everyone, there's a lot of excitement here at the front left. Put your hands up. Please introduce yourself, where you're from, and leave it to three questions.
Initially, Meagen is going to join me on stage. Fortunately, our three CEOs are all mic'd up, so I get to phone a friend. You know I'm in trouble if I have to ask the audience. And of course, everyone online, please feel free to follow the instructions on submitting your questions, and we'll come back to you after we've taken the questions in the room. So Hubert, you were so quick. I'm going to start with you again, if that's all right.
Thank you. Thanks, Richard. It's Hubert Lam from Bank of America. Since three is our favorite number, Richard, I'm going to ask three questions as well. Firstly, a couple of questions on costs. Firstly, on costs, you're guiding for our Meagen, you're guiding for GBP 150 million of annualized cost saves. Just wanted to clarify if that's a gross number or is that net of investments.
If it is the gross number, how should we think about investment costs, inflation, etc., and ultimately, what does it mean for the 2027 cost base? That's the first question. The second question, again, is on costs. Given all these cost savings you're implementing, how should we think about the impact to revenues? I think part of the cost savings plan is also to streamline the fund range. Ultimately, I think that probably leads to some revenue loss. So on top of that, how should we think about the revenue attrition associated with the costs? And lastly, on the Public Market guidance of stable over the next three years, what are the assumptions there around flows, markets, and fee attrition?
And I think if you go to that slide with the TAM, Richard, and it shows that active management revenues are going up on an industry basis, but you're forecasting flat, right? So what's the difference then? Are you too soon to see you're going to lose market share or are you more conservative? Just wondering.
We don't have to answer that question, actually, Hubert. So why don't I let Meagen answer the first two questions, and then I might actually get Johanna to just come up and answer the Public Markets question.
Sure. Thanks. Thanks, Hubert. In terms of the GBP 150 million, that is a net number after investment into our teams, as we suggested. It is gross of any costs associated with as our AUM grows and as inflation comes through. Hopefully, that answers your question.
Then secondly, in terms of simplifying our fund range, our intention is not to lose revenue. As Richard said, we put in clients first, and where we are simplifying our client range, our product range, it's about consolidation and making sure that we are focusing on the products where we have the highest growth levels.
Importantly, I'll just add on that, Meagen, as we look at the funds that we'd immediately get to, we would close that often not delivering the best returns for the client, right? One of the reasons we're going to talk to clients is to say, let's give you a different product from Schroders and actually change the return profile that you might be experiencing. Everything starts from what the client lens looks like.
Johanna, while you just, I think, come up onto the stage, I think the other thing in the assumptions, one of my assumptions is that as we look at the revenue profile for Public Markets, in recent years, our market share has remained pretty flat. I think as we go forward, we think by focusing on the overlap between demand and where we are really, really good, we can actually start to see some market share gains. But Johanna.
Yes, so if we think about the assumptions we made on Public Markets, the key growth areas, so first of all, if we start off with global equities, we're assuming that global equities will continue to grow like it's done in recent years, so at the same pace.
And the reason why we believe that is because we have a very broad range of global equity strategies, which are all delivering strong performance. So we see it, and we see very strong demand there. And actually, as Richard said, that's an area we're seeing shift from passive back to active. The other area we're expecting to grow is global unconstrained fixed income, where we're seeing it's already been growing strongly in the last few years, but we're expecting an acceleration in growth there. That's because actually, a couple of years ago, we restructured the team. You know, performance was not good enough in that area, and we've seen performance pick up. We're seeing demand for the strategies that team delivers, particularly in the income space.
And then we continue to expect solutions to grow, but not as strongly as it's done in recent years, just reflecting the fact that the DB market in the U.K. in particular is quite mature. Now, in terms of our forecast relative to the chart that Richard showed, where ultimately it's a growing market, the reason why we're more conservative is because crucially in our assumptions, we're expecting regional equity still to be contracting, which has been the theme of the last few years. Now, that's been reflective very much of an environment of U.S. exceptionalism. Our performance in U.S. large cap has actually been very strong, but it's not a big part of what we do. We're an international asset manager. So that's where potentially there's optionality on the upside. Now, we don't want to predict a major shift in market performance here, but I do believe in cycles.
As I said, we haven't made any assumption about a return to international markets really outperforming the U.S. Of course, we've had a good start to the year on that front. So I hope that answers your question. And sorry, I mean, on the margin, we've assumed a little bit of fee attrition in our numbers as well.
We're not allowing, Hubert, we're not allowing Johanna to put a bet on hoping that Asian equities are going to come back into the fold next year. So yeah.
Yes, hello, it's Nicholas Herman from Citi. Thanks for this update and for all the added disclosures. It's really helpful. Three from me as well, please, just to follow up on the Public Markets and stable revenues.
So the 15% of assets in Public Markets that is not the priority, just to be clear, is that being wound down and what proportion of Public Markets revenues does it comprise? And I guess within that, because it does seem like there is a fair amount of fee compression or revenue attrition as a result of this refocusing, is it just driven by this 15% being de-emphasized, or is it also being driven by repricing and switching funds into active ETF? And I guess as part of that, sorry, I appreciate that this is classic analyst. You provided the equity fixed income Multi-asset margins on slide 55. Just curious how the equivalent margins on active ETFs then compare to those. I'll stick to the one and you one other one, because I appreciate that was a lot.
For Private Markets, when you're thinking about the mix of your GBP 20 billion cumulative flows over the next three years, could you just give us a sense, please, how that breaks down, how you're thinking it breaks down across asset classes, products, but also distribution channel? And I guess within that, how much does Future Growth Capital comprise? Thank you.
God, Nicholas, that's. You're asking for a lot of information there. So yeah, okay. Well, I worked out with the rule of three. I remember doing an analyst job, but for stable revenues, let's be clear on the 15%. What we're not going to do is close down all the desks that are generating that 15%. This is about where we put our incremental resources. We are not going to destroy this client franchise by telling a whole bunch of clients we don't want to serve their needs.
But over time, you will see the resources committed to those actually being different. But that ties into Johanna's point about we see regional equities having a small portion. So focusing our efforts on selling, importantly, those nine strategies isn't causing fee attrition. It's actually hopefully driving revenues up because we've got a more effective sales engine that's delivering what clients need. And actually, I think you've got to be really careful on the revenue attrition. The revenue attrition is not being caused by us reducing the prices of the products that we're selling. It is principally driven by our clients' enormous switch in two things, right? In the current market, fixed income products. So you look at our Mutual Fund flows in the current year, there is clearly a switch, even though they end up being positive, between equity products and fixed income products.
And look, I don't expect that flavor to disappear anytime soon when we look at the interest rate outlook. And I think you've also seen a switch out of regional into global equities equally. That's going to continue, as Johanna rightly said, but that also has caused some of that margin softening that we've seen. So I don't want anyone to leave the room thinking that Schroders is experiencing a massive repricing down of our Public Markets business. We're absolutely not. What we're experiencing is we turn up to clients, we give them what they want, we remain relevant to them, and frankly, if that means the margin mix changes, the margin mix changes, and we need to run our business then to accommodate that. I could take the second one if you want. Do you want to take the, yeah, the margin point?
I'll take the margin points on the active ETFs. I think the first thing to be clear on is that we see this as additive to our business. It's not attractive. It's a new wrapper that we're putting on funds that we have, and we're initially looking to launch two product types, as we said, our more liquid equity strategies where we see margins to be in the mid-20s and also our credit strategies where we see margins to be more in the mid-30s.
And then maybe on the Private Markets business, I never like telling analysts what to put in their models, right? So let's just reflect on where our flows were in the current year. We saw really good flow into Private Equity, as we talked about. That small and medium-sized business is really good.
We saw increased flow into our Private Markets business, and there was more muted flow into the other two asset classes, right? So what you can expect is we're going to be working really hard on delivering growth across those four asset classes, but you should work on the basis that given where we are today and what I've just told you about 2024, you can think about how that translates into your expectations for 2025 forward. So FGC is counted inside that. So if you remember, we committed to a target over a three-year period. So that's actually built into our target. Mike.
It's GBP 2.5 billion of the three-year target.
Yeah. That's it. Mike over here.
There we go. Thank you. Mike Werner from UBS. Three questions, please. Maybe a little bit of a follow-up on the Public Market revenues. I guess within that, when we look at the regional equities, how much of the revenues within Public Markets comes from regional equities or AUMs, perhaps? And then is there scope if ultimately you outperform and instead of stabilizing revenues actually grow revenues? Is there opportunity to see potentially a lower cost-to-income ratio than 70% in 2027? And then on Schroders Capital, a significant increase in the seed capital investments planned in that business. Is this all going into follow-on offerings of existing strategies? Do you have plans for new incremental strategies, new capabilities? Because that's usually when you see the greatest seed consumption. And then finally, again, back on Schroders Capital, when we think about the solutions that you're offering there and that will help grow, is this one where you're looking at kind of a multi-product solution, whether it's Institutional and/or for retail? Thank you.
Yeah, Mike, you can just pass the microphone over the table, actually, for this question. But thanks for that. And I'm going to let Georg maybe comment on the last two questions, if that's all right, Georg. But look, I think we're not going to break. I'm not going to break the revenue numbers down for you by regional equities, but you can sort of see what we talked about in terms of 85% of our revenue comes from those nine strategies. And that's really where we're focused. Let's be super clear, as I just mentioned about. I'm not letting Johanna put her feet up and think that Asian equities are going to come back into vogue. If they come back into vogue tomorrow, our cost-to-income ratio will be significantly lower than the 75% it is today, right?
Of course, we have the possibility to outperform those targets if markets move in our favor. And what we've tried to do here is not actually anticipate that and be quite thoughtful about what we can see happening in the future. But of course, we are somewhat dependent, as Johanna said, we believe in cycles and we're sort of dependent on how that cycle moves. Georg, did you just want to, again, you have to come and join us on the stage. Did you want to just comment on, I haven't given a blank check, by the way, GBP 500 million. So maybe you just comment on.
Maybe I can talk about the capital soon as I'm managing that, and then Georg can talk about the strategies. So what we've said is we would invest GBP 500 million of capital, co-invest and co-seed.
That will still be subject to the lens that I suggested that we're looking at our capital allocations. Georg already has GBP 156 million, and we've said up to GBP 500 million, and we see the peak of that being in the sort of three years as he starts to regenerate the next vintage of his products and invest more. But he can talk you through exactly what those products are.
So to explain a little bit what it actually enables us to do, so what's really critical is that seed capital supports existing vintages, but also new funds through co-investments. So that's capital that's largely going into our closed-end funds and needs to stay in the funds for essentially their entire lifetime to display alignment of interest with our clients.
And then seed capital, which goes largely into new programs, where having minimum fund sizes, for example, GBP 100 million right from the start, enables us to essentially de-risk and accelerate the fundraising process. And to give you an example, we've created a really excellent and now nicely growing fund on the Private Equity side called GPE. It's now crossed the GBP 2 billion mark. And it took us essentially so we launched it five years ago. It's doubled in value in the meantime as well. So it's been a fantastic investment, and it's a great product for us. But it took us a long time essentially to get it from zero initially to raise sort of roughly GBP 150 million-GBP 200 million, from which point it started to take off, because international clients were essentially seeing the minimum sizes they needed to invest into that fund.
So that kind of gives you a sense. I think the other question you had was on Multi-private asset funds. So Multi-private asset funds, we've done quite a few of those, and we're seeing a significant potential in that area. I mentioned before two of the LTAFs that we're creating throughout our venture with Future Growth Capital. They are Multi-private assets. One is U.K.-focused. The other one is globally focused. It's a fantastic efficient building block, essentially specifically for DC investors. So that's getting more into the, if you want, retail Wealth space. And there's obviously more demand in that direction coming from the Wealth space more broadly. There is also demand for Multi-private assets, and I would indeed say Multi-asset in the Institutional front.
And I think Tesco, we mentioned before, is a fantastic example of this where we'll be able to offer to a client a solution that taps into every asset class from public to private and essentially deliver the whole asset allocation for an Institutional client. Hope that answers the question.
Right.
Oh, there we go. So Bruce Hamilton, I'm going to do three questions. And sorry, it's coming back to sort of clarify a couple of points being touched on a few times already. So in terms of the revenues for Public Markets, you're assuming normalized markets. So I'm going to guess maybe a blended 4%. And in effect, what you're saying is conservatively, you're assuming continued mix shift means your fee margin comes down a similar amount per annum rather than guiding to continued outflows from Institutional or Solutions, but maybe you can just confirm that.
Secondly, on the cost, so my start point on the new cost base, I think, is GBP 183.4 million for 2024. By 2027, GBP 150 million comes off that. But just to understand, presumably there is a bit of inflationary cost in the interim. So should we be thinking 3-ish% or in a world where that's a sort of deliverable kind of number? And then the final question on the Private Market side, it feels as though one of the big gaps has been distribution. So you mentioned sort of specialist sales. Where is that? Is it across the board, or is that for a specific client type or asset type? And can you maybe elaborate a little bit on how that can help?
Yeah. I feel, Bruce, you've told us, but I haven't really answered the questions before. Meagen, do you want to take the first two, and then I'll take the last one?
Yeah, sure. Bruce, on Public Markets, you're right. That is exactly how we're looking at it in terms of projecting our market growth. As we've said, we can't predict our clients' behavior in terms of exactly where they're going to be wanting to invest. On the new cost base, to be clear, the amount that will flow through by 2027 is GBP 150 million net, and that is after our investments. But it is gross of inflation and gross of our AUM. As our AUM grows, obviously, we bring in costs associated with that growth. We've assumed a marginal rate of 3% for inflation, but I leave it to you. That's part of your job in terms of modeling it out.
And really on Schroders Capital, so the 40 people that we're going to have focused on this is really through the Institutional channel. And what Georg and the team have done is work out the specific markets where we think we can have maximum benefit in that channel. And that's where we're hiring the individuals. It is just not, remember, those 40 individuals, because going back to the Wealth channel, we absolutely rely on the work that Karine's team does across Client Group in engaging with those platforms, with those Wealth managers to get our products in front of those. And of course, the leverage on the specialist capabilities in that new Salesforce, but we still rely heavily on the Client Group to get into that channel. Angeliki. Sorry, I went past you last time, so I don't want to miss you out.
Thank you very much. Angeliki Bairaktari from JP Morgan. With regards to the cost cuts, how should we think about headcount over the next three years and sort of what are your expectations in terms of headcount growth? Sorry, just to come back to the Public Markets revenue target. For the avoidance of doubt, do you expect within your plan inflows, zero flows, or outflows in each of the three segments, Solutions, Mutual Funds, and Institutional, if we look at sort of the cumulative number of flows over the next three years? And then with regards to the replatforming in Cazenove, is there any risk of disruption there for the clients? And I understood from the slides this is sort of starting in 2026. What are the associated costs and sort of what needs to change there? Thank you.
Thanks, Angeliki. Do you want to take the first two?
I can take one and three.
Oh, I was going to do three, but you take.
Let's not argue about that. Just back to that, Angeliki. I think what we've guided on today is really around, hopefully, I was clear in the presentation around our transformation program. It's not a blunt cost cut program. I'm not working towards any target on a percentage of headcount cut. We're guiding to total costs, and we're guiding towards getting to that 70% cost-to-income ratio over the next three years. Clearly, part of our process will be around looking at our organizational structure, but we are, for obvious reasons, not talking around specific roles. And then really just picking up on your third point on Cazenove, because it's related to the cost and the platforming.
As I mentioned earlier, we have an enviable history of deploying large-scale technology delivery, things like Aladdin, things like eFront. In Cazenove, we need to replatform our T24, which is an aged platform. Our intention will absolutely be not to disrupt our client experience through that, and it will be a well-managed program. We're starting to plan that now as we see that the technology has aged. I look forward to Oliver coming in and giving his views in terms of what our clients really want in their platform. But to assure you, the costs associated with that program have been applied in the GBP 150 million, well, in the GBP 200 million of spending to get the cost saved, yeah.
So I'm going to build on that, Angeliki. I actually think rather than thinking about it as disruption for our clients, we should see it as an opportunity to be able to do different things with our clients and change the client experience. Actually, it will allow greater automation, greater engagement through that client channel. None of those benefits are at all factored into our plan, so totally understand the question because we don't want to disrupt this important part of the business, but I actually want to see it as an opportunity for us. In relation to Public Markets, of course, I don't think we ever guided you on what we think flows will be, but Karine has got a very clear sales plan, certainly for 2025, and I think what you're going to see over 2025, 2026, and 2027 is the flow picture change.
What we hope to see is actually greater flow and greater net new business as we go through 2026 and 2027 that we might experience in the short term while we're getting all of the plan in place. I don't think we're assuming, and I think this goes back to maybe something Bruce said. I'm not assuming that we may not be, Bruce. I may be maligning you, unfortunately. We're not assuming that the Institutional channel is permanently in outflow. We don't think that is true at all. I do think we've got more opportunity in Wealth because that segment is growing so strongly. I don't think you should be assuming that we've given up on the Institutional channel. Oh, actually, I'm going to go to the back table. I won't forget, just because we were heading in that direction.
Hey, Mandeep Jagpal, RBC Capital Markets. Three questions from me as well. First one on capital allocation. You said you have a focus on return on tangible equity when assessing capital allocations. It would be helpful if you could share your cost of equity for these decisions or the minimum return we could expect on any investments made. Second one on Solutions. Richard mentioned that DB schemes are running on. Is there any indication that your clients are keen to run on for longer rather than transfer their assets to an insurer? And what impact could this have for Schroders Solutions? Or maybe you could touch on the implications for Schroders of the government's DC and LGPS consolidation plan more broadly. And then finally, on performance, you provide group performance versus benchmark. And you talk about the strong performance in your global equity funds.
Are you able to disclose investment performance on one in three years within equity specifically, which would help with comparison versus peers?
So I'm going to let Meagen take the first question, and I'll deal with the second and third. On the third one, at the moment, I'm not going to give you any more detail on the performance of the sub-segments of the asset classes. But you take—and I'm really happy you asked this question because I told Meagen someone would ask this question. But you take the question.
Absolutely. So as mentioned, in terms of our capital allocation framework, our capital committee is looking at all of our investments, including our seed and co-investment, through the lens of return on tangible equity. Over the medium term, our cost of equity, we're looking at around 10% low double digits.
If I take the defined benefit scheme, of course, the run-on proposals that government have outlined. We've got quite a way to go on those to actually see the detail. But if I just stand back and maybe explain a little bit about what we did at Schroders a year ago, is we agreed with our own Pension scheme, and we were very fortunate we had the DC and DB schemes in the same trust that we would effectively move in, take on a run-on proposal where we could increase the risk in that, given our surplus position, which is to the mutual benefit, by the way, of both the members and actually us as sponsors. So it allowed us to take the surplus and use it effectively to the DC scheme.
There is definitely increasing appetite from other companies who are in that surplus position to actually go down that route. Look, I think it varies depending on company and the risk appetite and whether people are fearful that actually we might go back into negative territory. I think there's definitely appetite, and we're absolutely making sure that we are well placed through James Barham's team to be there for people. Look, I think the DC proposals from the government, in principle, the consolidation of the LGPS schemes doesn't in and of itself, by the way, fix all of the issues that we're trying to deal with in that sector. It actually is an opportunity for us. I think we're going to go through a cycle. It's very interesting.
If you go and look at Australia, what we found is that the consolidation in the super funds ended up in more in-house consolidation, and that trend is now reversing as people realize the need to access specialist capabilities, and they can't afford to have them all in-house. So I actually hope the consolidation within LGPS is going to present a big opportunity for us as we go forward, and we're working quite hard to position ourselves well with that sector. David, sorry. I'll do it. I'm going to do David, and I'll come back to the back table. Sorry, I'm moving around a bit.
Morning. David McCann from Deutsche Numis. We'll stick with the three. But I will ask a question on an area that hasn't been asked yet, which is the JV and associates. So you've obviously articulated that there could be some significant value in those assets you have there. Just wonder what your thoughts are on how the group actually, in time, monetizes those assets, be sold them off, or actually get some capital out of those businesses and back to the parent in the U.K. How do you think about that to start with? That's the first one. And secondly, just to come back to the costs again, just a question really on the phasing of those. You've told us GBP 40 million, I think, on this gross number before inflation in this year, and obviously GBP 150 million in 2027, although is that 2027, or is that actually effective 2028? So how should we think about 2026 and possibly 2027?
And then within the cost question, if you're kind of stepping away from the comp ratio, which is a bit this variable, how should we think about your fixed variable split? Because obviously, if markets go up or down a lot, that's going to change some of the math around this. And the final question just around the capital of the business. Obviously, you've talked about increasing the seed capital. You didn't really answer the question earlier about how share buybacks distribution fall into that, other than saying you're not going to increase the dividend or very likely not going to increase it over this period. So what are the other plans for the capital? And I guess within that, does that signal that you would look at mid- to large-size acquisitions again?
Meagen, do you want to take the second and third one, but I'll start with the first one?
Yeah.
So as I said, David, I think those JVs that I talked about actually really give the shareholder access to those markets, and both of them represent a fabulous return, by the way, on the investment that we put into those businesses. Would we choose to monetize that? That isn't the plan as we sit here today. The reason to explain that to you, frankly, is so that you understand the value that we are sat on. But whilst ever we think they are generating value for the shareholder at the right return rate, there's no immediate need for us to do anything with them. Meagen, do you want to pick up on the cost point?
Sure. In terms of cost, and apologies if we haven't been clear, that GBP 150 million we have said is phased pretty evenly over those three years. Realistically, we are taking most of the cost out in the first 18 months, but it takes time to get the full annualized value of those. The plan is to have that 150 out of the value by the run rate at the end of 2027. Hopefully that clarifies that. In terms of capital generation, we are looking at, as we mentioned, we've got a healthy balance of GBP 838 million. Within that, we have our Tier 2 bond, which has given us some diversification of capital sources and extra liquidity. As we've mentioned, we are really looking to invest primarily organically in the business as we look to grow Schroders Capital.
And as we go through the transformation period to make sure that we have enough capital and liquidity, because it won't be as cash generative, it will be generating capital, but not as much. And then thirdly, we did mention that we've got Basel 3.1. We're regulated as a bank that is coming down the line in 2027. We're not 100% clear what that will look like, and therefore that's where we are holding our capital. The variability of costs in terms of we're no longer going to be talking about a cost-income ratio. As I've said, we're guiding on total costs. Our cost-income ratios will be much the same as we look to increase our focus on keeping our talent going forward.
And look, David, just one point, because I'm consciously running out of time. Just one point on that variability cost. Don't assume that when we have headcount costs, that that means they're variable. Actually, I think they're probably the most invariable part of our business, because actually it isn't that we're paying people too much at Schroders. And certainly, it costs a lot of money if we ask people to leave. So what we're trying to do here is manage the whole cost base and think about, yes, variability, but what is the right mix of all of our resources, internal, external, and service providers? I'm conscious we are running out of time, so I'm going to go to two questions at the back, and then I'm going to go to the guys online, if that's all right.
Thank you, Richard. My name is Melwin Mehta from Sterling Investment. Two questions only, please. In fact, I'm going to the reverse direction of David. Is there an option for Schroders to increase our equity stake in these two countries, especially you may be more comfortable in India, given where the stage and age of those countries are in terms of AUM? Do we have an option? Do we have a right to increase our percentage stakes in both companies? And my second question is, every time I read American private equity or other funds kind of taking a stake or taking over U.K. Infrastructure assets, my blood pressure goes up by certain notches. Is that something that you share my pain? And does Schroders see this as an opportunity in partnership, either with pension funds or by your own in terms of a fund? Thanks.
Right, that's the question. The first one is really super easy. We don't have a right to acquire more of those joint ventures, and any change that happened would actually have to be in negotiation with our joint venture partners. On the second point, I share your pain, and my blood boils, but actually, if we go back to what we're really good at, and as I said, we're focusing on what we know we're really good at, that is around renewable energy infrastructure assets, and I think we're already market leaders here in the U.K., so we will continue to aim to be the market leaders here in the U.K., but maybe some of our competitors might want to step up and take some of the strain on that as well, so I do share your pain. One more question, and I'm going online. Yeah.
Hi, it's Greg Simpson from BNP Paribas. Yeah, three questions, hopefully quick.
First one is a lot of alternative managers do talk a lot about the private wealth opportunity. Can you share how allocations are in your own Wealth business towards Schroders Capital and if there's an appetite to do a lot more between the two? Second one was on active ETFs. My impression is a lot of the growth has all been in the U.S. because of tax efficiency and advisors using them in their model portfolios. So I'm wondering why the launch in Europe when maybe these ingredients aren't there so much. And thirdly, just to double-check the messaging on appetite for M&A, is there a desire to inorganically add more capabilities to Schroders Capital? And should we expect more bolt-ons in Wealth? Thank you.
So just remind me of your first question. I wrote it down. I can't even read my writing, and I've got my glasses on. I'm sorry about that.
Private and Wealth.
Linkage of Schroders Capital.
Oh, that's right. Sorry, I wrote Private Wealth. Right. So of course, we offer our products from Schroders Capital through Cazenove. Obviously, we don't take that down into the affluent segment. I can tell you personally, I met with my Cazenove person last week, and he sat down and told me I needed more Private Markets content. And he actually took me to a Schroders Capital product. We, of course, are open architecture. So what they're really doing is recommending best in breed. It wasn't the only option I was offered, but it most certainly is actually we're driving that opportunity through Cazenove. Do I think there's more we can do in that space? Absolutely. And I think that's, of course, one of the things I'm sure Georg is going to be focused on.
I mean, on the active ETF point, this for us to be clear, I totally agree with you. We've actually had active ETFs in the U.S. for a long time. We offer those through the Hartford platform. We don't have the same tax advantages here in Europe. Why we're doing this, of course, is some people do want the accessibility and flexibility of that wrapper. So we're providing products that we think those individuals will want through that mechanism. It isn't about us signaling that we think there's a big shift out of the existing Mutual Fund market. As I think I said to someone earlier, in Europe this year, we have seen record inflows into Mutual Funds. So let's not call the death knell on that industry. What we're trying to do is to make our products more accessible to our clients.
The appetite for M&A, I think I've been really clear that we totally will do M&A in Wealth if we think it is a good bolt-on acquisition for our businesses. Elsewhere, I have three simple principles. It has to be good for our clients and give them capabilities that we don't have today. It has to be good for our employees, and it has to be good for our shareholders and meet Meagen's very strongly held views about her return on tangible equity. If it does those three things, then I'm not taking anything off the table or putting anything on the table. I just want to make sure we've got those three hurdles as actually the things that we would have to get over. I'm now going to go, David. Is there anyone online with a question?
Yeah, the Q&A is closed online, but Isobel came in with one. So Isobel Hettrick from Autonomous Research, do you see a risk that the launch of active ETFs cannibalizes your active Mutual Fund flows? And what's the difference in net revenue and net profit margins between the two products?
Meagen, do you want to cover that?
I think we have covered it in the room, but Isobel, no, we do not see it cannibalizing our existing Mutual Fund flows. As we've said, we see it as an additional wrapper to provide extra access or new access to clients. And then in terms of flows, we guided on, I mean, in terms of margins, we guided on two products that we are launching in the mid-30s for an equity product, a fixed income product, and in the mid-20s for a global equity product.
David, are there any other questions?
No, that's the only one.
Great. So I think we're just about done. Someone said to me the only benefit you get as a chief executive is you're always going to have the last word. So I thought I would leave you. Sorry. I'll leave you. Leave you with a few concluding remarks that I hope leaves you with a sense of where I think we are. And firstly, Schroders is really an exceptional organization. We are unashamedly active. I hope you got that message. And the case for active has never been clearer. And that's what clients across the world rely on from Schroders. Our brand resonates globally. And our focus now is moving to pursue shareholder value with the same fervor and diligence that we pursue investment performance. Our biggest asset is our people. They have deep relationships. They're great at investment performance.
And the confidence you should have in us delivering that investment in that transformation program is because their resilience and their commitment to this organization will propel us through the next two years. And our investment in them is central to how we see growth returning back to this business. So my real message is this business has every single ingredient we need to not just thrive, but to go back that profitable growth for our shareholders. And with that, I look forward to answering all of your questions in a few months' time about how we're getting on. I am sorry for keeping you later than we had suggested. I hope the bacon rolls this morning kept you going throughout the morning. But thank you very much for all your time. And hopefully the exec team are still around.
If you've got other questions, we're very happy to catch up. Thank you everyone.