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

Abrdn clients continued to rake in billions from the investment group last year amid a challenging economic backdrop.

The active asset manager, rebranded as Standard Life Aberdeen three years ago, recorded net outflows of £13.9bn in 2023, up from £10.5bn a year earlier.

Although the company saw lower customer repayments, gross flows declined by £9bn to £50.3bn as market conditions deterred investors from injecting fresh capital.

As a result, Abrdn’s net operating income fell 4 per cent to £1.4bn, with its investment management business seeing the biggest drop in turnover.

The Edinburgh-based company posted just £6 million in pre-tax losses, down from £612 million in 2022, mainly due to lower impairment and restructuring charges and higher profits in its financial advisory and Interactive Investor segments. .

Adjusted operating profit was £249 million, in line with forecasts but down from £263 million 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 further revenue margin contraction.”

Abrdn also kept payouts to its shareholders stable at £600m, partly by selling its stake in Indian life insurer HDFC.

abrdn actions They rose 3.6 per cent to 167.3 pence on Tuesday morning, but are still significantly below their value when Standard Life and Aberdeen Asset Management merged in 2017.

Under the leadership of Stephen Bird, the company is executing a turnaround program through cost reductions and asset disposals, aimed largely at reviving its investment division.

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

It also cut costs within its investment arm by £102m, beating a savings target of £75m.

And in January, Abrdn announced a new target of at least £150m in additional 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, allowing us to fund our cost transformation while we continue to invest strategically in growth areas and maintain our dividend.

‘There is a lot of work ahead, but we are confident that we will be able to achieve future growth.

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

However, the group warned Tuesday that it anticipated continued headwinds “from changing demand and customer preferences” in the coming year.

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 a more or less constant state of flux over the last few years.

“This challenging context is reflected in today’s mixed results, which have some signs of positive points but also highlight areas for improvement.”