Results round-up: RLAM assets hit record £130bn in H1
Trading updates to 30 June 2019
With the difficulties of the 2018 financial year behind them, asset and wealth managers are getting back on their feet with net inflows and asset growth. Here, we report on their trading updates to 30 June.
Aviva Investors
Aviva Investors reported an increase of £15.4bn, or 4.66%, in assets under management in H1 2019, thanks to "favourable market and foreign exchange movements" and despite net outflows.
The firm said it saw net outflows during the six months to 30 June of £5.5bn, while £3.2bn of assets were transferred to an external manager. However, this was offset by a £24.1bn boost as markets climbed higher in the period.
Aviva's total assets under management and administration at 30 June were £379.7bn, it said, up from £359.8bn at the same time last year.
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Meanwhile, Aviva Investors saw its operating profit decline by almost a fifth to £62m, from £76m, due to a reduction in fee income thanks to the disposal of businesses in 2018.
Overall, the business saw operating profit edge up by 1%, to £1.45bn, with CEO Maurice Tulloch noting it has "strong foundations to build upon, but there is much to do to improve our performance", which was described as "mixed".
Legal & General Investment Management (LGIM)
LGIM has attracted external net inflows of £60.3bn in the first half of 2019, more than quadrupling its takings for the same time last year of £14.6bn, as Asian clients poured money into its index products.
Overall, international business contributed £44.6bn to flows, including a £37bn passive mandate with the Japan Government Pension Investment fund, pushing international assets up 50% to £343bn.
European net flows were £4.9bn, up from £400m in H1 2018, but LGIM's offering was less popular with US clients, who contributed £2.6bn, down from £8.3bn in H1 last year. The UK retail business also experienced strong flows of £1.7bn, up from £1.4bn in H1 2018.
As a result, the group's AUM rose 15% to £1.135trn by the end of June, having broken past the £1trn mark at the end of last year and up from £985bn at the end of June 2018.
The business's operating profit also rose, albeit just by 1% from £203bn in H1 2018 to £205bn this year. Its management fee revenues increased to £425m from £401m in 2018.
This year has also seen a change of leadership at LGIM, with Michelle Srimgeour joining as CEO in July; the group said she is reviewing the strategy of the business and will provide an update in the March 2020 annual results.
Standard Life Aberdeen
Standard Life Aberdeen has reported a reduction in net outflows in the first half of 2019, saying these have been concentrated in a small number of strategies, with gross inflows "well diversified".
However, the group still lost £15.9bn in H1 2019, down from £16.9bn it shed during the same period last year, and £24bn in the second half of 2018. Shares dropped almost 6% in early morning trading following the announcement.
SLA said outflows from equity funds were particularly pronounced due to lower demand for the asset class, but absolute return outflows had slowed since last year. Gross inflows in institutional and wholesale increased by 40% since the second half of last year to £22.8bn.
Meanwhile, AUM rose 5% to £577.5bn, with platforms assets rising 11% to £66bn. Adjusted profit before tax was lower than the £311m reported at mid-year 2018, standing at £280m, which reflects lower revenues.
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CEO Keith Skeoch said: "We have made good progress in reshaping our business so that it is set up to take advantage of the trends impacting our industry both globally and in the UK.
"We are encouraged by an improvement in our investment performance and a growing number of strategies with positive ratings from investment consultants. We are seeing inflows that are more diverse and are pleased to have retained £35bn of Lloyds Banking Group assets.
"We are also building for the future, with our business in China securing a license to develop a pensions business and our financial advisory business 1825 announcing two acquisitions that will significantly increase its assets, number of advisers and national reach.
"With a strong balance sheet, our drive for efficiency and ability to invest in innovation, technology and our people, we are well placed to deliver value and sustainable returns for our shareholders."
