Rathbone Brothers (LSE: RAT) has been managing money for investors since the 1720s, forging a solid reputation for itself as a wealth manager over this period. Building on this reputation, since becoming a public company, the firm has produced impressive returns for its own shareholders. Over the past 10 years, the shares have returned an annualised 12.4% through a combination of capital growth and dividends.
I believe that this trend is set to continue for many years to come as it continues to work on its reputation as a leading wealth manager. Today it reported that profit before tax, for the year to December 31 increased by 17.6% to £58.9m as funds under management expanded to £39.1bn, up 14.3% year-on-year. By the end of 2018, management hopes to have boosted this figure to £40bn.
Thanks to the performance of its investment managers, the group should have no trouble reaching this goal. Rathbone manages a portfolio of unit trusts for both its clients and outside investors. These trusts have performed well over the past year, so well in fact that assets managed by the trusts grew by 21.8% for the year to a record of £5.3bn.
Off the back of these impressive figures, management has hiked the final dividend per share to 39p, giving a full-year payout of 61p, an increase of 7% year-on-year.
Built for the long-term
Rathbone’s peer, Charles Stanley (LSE: CAY) is another asset manager that I believe could help you make a million.
It too is benefitting from rising demand for asset management services. For the six months to the end of September, it reported profit before tax increased 53.3% while funds under management rose 1.3% to £24.3bn. Even though the company is still relatively small compared to its larger peer, management believes the business can become “the UK’s leading wealth manager by 2020.” This implies that in the years ahead, the group will be working hard to drive growth in assets under management and profitability, which should be great news for shareholders looking for growth.
The company’s well-established reputation should help the proposition to clients as the business is one of the oldest firms on the London Stock Exchange and has been advising clients on wealth management for over 230 years.
An investment for all environments
The great thing about these two wealth managers is that they are well positioned to profit in all market environments. For example, today with markets steadily rising, they’re attracting assets from investors wanting to get in on the action. A higher level of assets should translate into more residual income from investment management. On the other hand, in volatile markets, which might scare new investors away, these two firms will benefit from higher levels of trading commission revenue.
Put simply, no matter what the market environment, Charles Stanley and Rathbone should be able to generate steady returns for investors for many decades to come. Right now shares in Rathbone support a dividend yield of 2.4% and trade at a forward P/E of 19.3. Meanwhile, Charles Stanley trades at a forward P/E of 13.2 and supports a dividend yield of 3.5%.
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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.