Abrdn flags tough investing year on par with 2022 as assets shrink

Asset manager Abrdn has reported shrinking assets and a drop in profits for its investment division as it said this year was shaping up to be as challenging as “one of the hardest investing years in living memory”.

The FTSE 100-listed finance firm saw its shares drop by a 10th on Tuesday after revealing its financial results for the latest half year.

Assets under management by the firm shrank to £496 billion in the six months to the end of June, from £500 billion at the end of December.

It was led by a 16% jump in net outflows to £4.4 billion, as more people moved money out of funds and investments with Abrdn.

It reflected customers responding to the increased cost of living, and high inflation and interest rates weighing on demand for advisory services, the firm said.

“If 2022 was one of the hardest investing years in living memory, 2023 is shaping up to be equally challenging,” chief executive Stephen Bird said.

“Geopolitical risk is back. Inflation is back. Credit risk is back.

“The changing dynamics and challenges within traditional asset management are well known – the relentless rise of passive and index investing, democratisation of technology and finance and the faster growth of alternatives are all ongoing themes.”

Nevertheless, outflows for its investment and advisory divisions were partially offset by some £1.9 billion coming in for Interactive Investor, the investment platform which Abrdn acquired last year.

Furthermore, it saw its adjusted operating profit jump by a 10th to £127 million in the latest half year, and revenues edge up slightly.

The vast majority of its profits were generated from its personal and adviser arms, the group said.

Profits for its investment division slumped by two thirds over the first half.

Abrdn, which was known as Standard Life Aberdeen until it removed the vowels in its name in 2021, said it was on track to make £75 million in cost savings for its investment division by the end of the year as it strives to restore it to a more “acceptable level of profitability”.

Despite the tough conditions, the firm said it was returning another £150 million to shareholders via buybacks.