RBC sees UK wealth stocks near trough valuations as Q1 reporting season begins Proactive uses images sourced from Shutterstock
RBC Capital Markets keeps outperform ratings on four UK wealth names as geopolitical uncertainty clouds the near-term flow outlook.
RBC Capital Markets has issued a sector update on UK-listed wealth managers, arguing that valuations already reflect much of the macro risk facing the industry as first-quarter trading updates begin this week.
The bank maintains ‘outperform’ ratings on Quilter PLC (LSE:QLT), Rathbones Group PLC (LSE:RAT, OTC:RTBBF), IntegraFin Holdings PLC (LSE:IHP) and Tatton Asset Management PLC (AIM:TAM), citing earnings growth potential and scope for re-rating from current levels.
The sector’s average 12-month forward price-to-earnings multiple has fallen to 14.5x, well below its long-run average of 18x since 2020 and close to the troughs reached during the 2022 Russia-Ukraine conflict.
RBC notes that most names are already trading near or below their minimum 2022 price-to-earnings multiples, which it views as providing meaningful downside protection.
Capital returns averaging 5.1% of market capitalisation across the sector add further support to the investment case, with Quilter identified as the standout, offering a total return yield of around 7.5% on a 12-month view incorporating dividends and a £100 million share buyback.
The quarterly reporting season gets underway on Wednesday when Brooks Macdonald Group publishes its third-quarter trading update, with IntegraFin, Quilter, PensionBee, AJ Bell and St. James’s Place all due to follow by the end of April.
RBC expects a solid first-quarter net flow outcome at the sector level, reflecting favourable conditions in January and February, though it has trimmed individual estimates to account for the market volatility and softer retail sentiment seen in March.
The bank draws parallels with 2022, noting that organic growth remained positive across the sector even during that year’s sharp market downturn, and that higher interest income helped offset fee revenue headwinds.
AJ Bell PLC (LSE:AJB) has been the clear year-to-date outperformer with a share price gain of 18%, which RBC attributes to the stock’s relatively low exposure to market-linked revenues and high reliance on client interest income, though the bank rates it sector perform and views the extent of the re-rating as outsized.
RBC singles out St James’s Place PLC (LSE:STJ) and Brooks Macdonald Group plc (LSE:BRK) as the two stocks most likely to attract market attention during the upcoming reporting round, with the former presenting what the bank describes as arguably the first clean quarter since the introduction of a new charging structure in August 2025.
For Brooks Macdonald, RBC is looking for evidence that management’s Reignite Growth strategy is translating into a sustained improvement in net flows, with the medium-term target of 5% annualised net inflows remaining some way off the current trajectory.