Chair Richard Watt noted that performance “was materially below benchmark levels” and said the board had challenged “management on the drivers of underperformance and examined scenario analysis under varying market leadership conditions. We sought assurance that portfolios remained aligned with their stated mandates and long-term investment philosophy.”

The Global Composite returned 10.0%, compared with 19.5% for the MSCI World Index. The EAFE Composite returned 8.2%, versus 31.2% for the MSCI EAFE Index. The Edinburgh-based firm is a subsidiary of Bank of New York Mellon.

In its annual company accounts for the year, the firm reported that turnover fell from £314m to £262m, “reflecting lower average assets under management”. The firm explained that “strong returns” were offset by client withdrawals and “relative underperformance”.

The fund manager’s expenditure decreased to £106m from £123m in the 2024 financial year. It’s net cash outflows were £13.8bn.

Profit before tax fell to £157m from £195m in 2024, a 19.5% decline. The firm paid out £87m in dividends to its parent, Bank of New York Mellon, down from £179m the previous year. The chair said this was “consistent with reduced profitability and a prudent capital management approach”.

He added: “The MSCI World Index closed at 4,430 on 31 December 2025, 19% higher than the 31 December 2024 close of 3,708. Client rebalancing and de-risking in response to strong markets, along with withdrawals due to relative underperformance, were the primary drivers of net cash outflows of £13.8bn (2024: net cash outflows of £7.1bn).”
Compensation paid to directors rose from £9.8m to £10.3m, with the highest-paid director receiving £4.103m, up from £4.028m in 2024.

Mr Watt succeeded Alex Hammond-Chambers as chair of Walter Scott in January this year. Writing in the annual report, he said: “The board recognises that relative performance in 2025 was materially below benchmark levels. 

“During the year, we reviewed portfolio positioning, factor exposures, liquidity and portfolio construction discipline in detail. We challenged management on the drivers of underperformance and examined scenario analysis under varying market leadership conditions. We sought assurance that portfolios remained aligned with their stated mandates and long-term investment philosophy.

“Recent years have been characterised by narrow market leadership and elevated index concentration. The board’s role is not to adopt a short-term market view, but to ensure that the company applies its investment discipline consistently, manages risk appropriately and communicates transparently with clients. bRelative performance and client outcomes will continue to receive close oversight.”