Profits dive 66% at abrdn investment arm as funds struggle to outperform

investmentweek.co.uk:

abrdn CEO Stephen Bird noted the overall performance of the investment arm’s funds was 'not where we want it to be' and acknowledged there remains 'meaningful work to do'.

Year-on-year H1 adjusted operating profit has continued to shrink, down to £26m from H1 2022's £76m and a hefty 79% fall from H1 2021's £126m.

Net outflows have continued at the asset management business, with £6.5bn leaving the business over the first half of the year, however, these are tempered compared to the previous year's £37.3bn haemorrhage of assets.

AUM has ticked down 2.3% across the investment arm, with the £8.5bn net reduction taking the total to £367.6bn.

'The writing has been on the wall for some time' for abrdn's GARS

The investment arm also remains on track to deliver its £75m net cost reduction target by the end of the year, with £30m realised by 30 June 2023, while the rationalisation of the fund range is also on schedule, with 101 of 143 planned closures or mergers completed.

Performance remains weak across the fund range, with just 41% of total AUM outperforming its benchmark over one year across the business, improving slightly to 58% over three years.

Echoing his comments from earlier this year, abrdn CEO Stephen Bird said: «If 2022 was one of the hardest investing years in living memory, 2023 is shaping up to be equally challenging.»

He described fixed income as the firm's «biggest growth opportunity in public markets», an area which saw 65% and 77% AUM outperformance of benchmarks over one and three years. respectively.

This was a much stronger showing for the firm in public markets compared to other asset classes, with equities reporting 40% and 36% AUM outperformance over one and three years, respectively, and just 10% and