Abrdn clients pull £4.4bn amid ‘challenging’ environment

Asset manager Abrdn reported net outflows of £4.4bn in the first six months of the year as clients pulled more money from its funds amid a “challenging macro environment”.

The Edinburgh-headquartered company, formerly known as Standard Life Aberdeen, reported a 4% increase in net operating revenue to £721 million in the six months to 30 June 2023, with growth in Adviser and Personal offsetting lower revenue in Investments, while adjusted operating profit of £127 million was 10% higher than a year ago.

Net operating revenue in Investments was 15% lower at £466m due to lower average AUM and net outflows, particularly in equities. Adjusted operating profit plunged 66% to £26m. 

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Assets under management fell 1% to £496 billion, reflecting net outflows of £4.4 billion during the period.

Chief executive Stephen Bird, who has been trying to diversify the firm away from purely traditional asset management, said: “The business has been reshaped to deliver greater resilience, while getting set to take advantage of fast moving sectoral and macroeconomic factors.

“There is still work to do to complete our transformation.”

What next for Abrdn?

Bird said the business is on track to deliver its £75m cost savings target in investments. He announced that its £150m shares buyback program is being doubled.

The group’s IFRS loss before tax came in at £169m, compared with a loss of £326m a year earlier, largely driven by the fall in market value of its listed stakes. 

Aberdeen said the loss relates to the drop in the value of listed shares in its portfolios while it attributed the outflows to clients pulling out of equities in a shift of their “asset allocation moved to debt products and cash in the rising interest rate environment.”

Abrdn warned the “outlook for global markets remains uncertain and we are taking actions to put our Investments business on a better footing.

“In the short term, additional headwinds arise from changing client demand and preferences.”

The dividend was left unchanged at 7.3p.

John Moore, senior investment manager at wealth firm RBC Brewin Dolphin, said: “Abrdn’s results are a real mixed bag, but there are some tentative signs its move towards diversification is beginning to pay off. The closure of its Global Absolute Return Strategies fund and the selling down of its Indian investments mark the end of an era as it looks to build a modern financial services business. The latter is helping to fund further shareholder returns, with the share buyback programme being extended.

“The addition of interactive investor is proving to be a major part of Abrdn’s transformation plan, while further acquisitions will bolster its offering,” he added. “Although its share price is up one-quarter on a year ago, Abrdn still has some way to go with its plans and there will be challenges ahead as markets remain volatile.”