Abrdn net outflows near £14bn as fund manager ups dividend and prepares cost cutting


  • Abrdn reported net outflows of £13.9bn, against £10.5bn the previous year
  • But the firm reported just £6m in pre-tax losses, against £612m for 2022

Abrdn customers continued to pull billions from the investment group last year amid a challenging economic backdrop.

The active asset manager, rebranded from Standard Life Aberdeen three years ago, reported net outflows of £13.9billion in 2023, compared to £10.5billion the previous year.

Although the company noted lower client redemptions, gross flows declined by £9billion to £50.3billion as market conditions discouraged investors from injecting fresh capital. 

Challenging result: Abrdn rebranded from Standard Life Aberdeen three years ago, reported net outflows of £13.9billion in 2023, compared to £10.5billion the previous year

Challenging result: Abrdn rebranded from Standard Life Aberdeen three years ago, reported net outflows of £13.9billion in 2023, compared to £10.5billion the previous year

As a result, Abrdn’s net operating revenue dropped by 4 per cent to £1.4billion, with its investment management business seeing the biggest fall in turnover.

The Edinburgh-based firm reported just £6million in pre-tax losses, against £612million for 2022, primarily due to lower impairment and restructuring charges and higher profits at its financial advice and Interactive Investor segments.

Adjusted operating profits came in at £249million, in line with forecasts, but down from £263million in 2022. 

The group also warned that margins could come under pressure in 2024 as larger investors shift their attention to cheaper passive strategies. 

It said: ‘Within Insurance in particular, we expect the asset rotation from active equity and fixed income strategies to passive quantitative strategies experienced in 2023 to continue into 2024. 

‘This, together with related pricing changes, may result in a further contraction of revenue margin.’

Abrdn also kept its shareholder payouts stable at £600million, partly by offloading its stake in Indian life insurer HDFC.

Abrdn shares rose 3.6 per cent to 167.3p on Tuesday morning, but they are still significantly below their value when Standard Life and Aberdeen Asset Management merged in 2017.

Under Stephen Bird’s leadership, the company is executing a turnaround programme via cost reductions and asset disposals, largely aimed at reviving its investments division.

Last year, Abrdn sold its European-headquartered private equity business to Patria Investments for £60million and its US private markets arm to HighVista Strategies.

It additionally shrank costs within its investments arm by £102million, surpassing a £75million savings target.

And in January, Abrdn announced a new target for at least £150million in further savings by the end of 2025, which will include cutting around 500 jobs or 10 per cent of its workforce.

Bird said: ‘Our balance sheet remains strong, which enables us to fund our cost transformation while continuing to strategically invest in growth areas and maintain our dividend.

‘There is significant work ahead, but we are confident we will be successful in delivering future growth.’

As part of its expansion efforts, Abrdn acquired Interactive Investor in March 2022 as it sought to capitalise on the pandemic-induced boom in retail investing.

Yet the group warned on Tuesday that it anticipated continued headwinds ‘from changing client demand and preferences’ in the year ahead.

John Moore, senior investment manager at RBC Brewin Dolphin, said: ‘Financial services markets are changing more rapidly than ever and, with that, Abrdn has been in more or less a constant state of flux for the past few years.

‘This challenging backdrop is reflected in today’s mixed results, which has some signs of bright spots but also highlights areas for improvement.’





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