Standard Life Aberdeen has reported outflows of £16.6bn in the first half of 2018, higher than the £12.4bn reported for the same period last year, with the group saying it is focused on improving performance in its GARS, emerging markets and global equities strategies.
The merged group also reported adjusted profit before tax had fallen to £478m from £521m last year while assets under management and administration (AUMA) had dropped from £627bn at the end of the first half 2017 to £610.1bn at end of June 2018.
Co-CEOs Martin Gilbert and Keith Skeoch, said: "Conditions for the asset management industry continue to be challenging. However, our gross inflows remain robust and are spread across a diverse range of investment capabilities, and our market-leading adviser platforms continue to grow.
"Our investment and distribution teams are winning new mandates and we have a good and diverse pipeline of business from around the world. We are actively taking steps to improve our investment performance in key areas and are encouraged by the impact of these initiatives."
AUMA and flows
While total AUMA decreased, the group said Aberdeen Standard Investments saw assets fall from £575.7bn for the end of the financial year 2017 to £557.1bn and Standard Life Pension and Savings assets climbed to £56.3bn from £54bn.
The group said "net flows remain a challenge but it is encouraging that these are concentrated in a narrow range of strategies."
It said there were outflows from higher margin products such as GARS and equities strategies, impacting revenue margins on the growth book which shrunk from 50.7bps to 48.7bps.
In its outlook, the group said "we remain focused on supporting our teams and improving performance in GARS, emerging markets and global equities, while remaining true to our investment style."
In a conference call, Gilbert said overall GARS had seen a decline of £5bn in AUMA but there had been an improvement in outflows.
"The market is now moving our way. That period of liquidity-driven markets is coming to an end. We will see more difficult markets and GARS will come back into its own in that period."
The results also added gross inflows of £38bn were well diversified across our broad range of "new active" capabilities. It reported "strong interest" in credit, private equity, real estate and multi-asset solutions including MyFolio.
It said: "We continue to enhance our range of "new active" investment capabilities and have increased the pace of innovation with 20 new funds launched in H1 2018.
"The build out of our capabilities in key areas of future market demand was accelerated by targeted bolt-on acquisitions in private markets, closed ended funds and ETF capabilities in the US.
"We have also forged new strategic partnerships with Virgin Money and Phoenix. Looking ahead, we have a good pipeline of new business across a broad range of capabilities including further significant business transitioning from Phoenix."
Adjusted profit before tax from continuing operations for the group stood at £311m, down from £355m for the same period last year but the group noted this was up on the second half of 2017 as "we start to see the benefit of improved operational efficiency".
Meanwhile, adjusted operating income was £966m, a decline from £1.04bn the previous year, reflecting the lower AUMA and reduction in overall revenue margin to 32.5bps from 33.7bps.
Fee revenue at Aberdeen Standard Investments was the main driver with this figure falling to £871m from £950m.
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