Aberdeen hit by £32.8bn of net outflows

Added 28th November 2016

Aberdeen Asset Management has reported £32.8bn of net outflows with negative economic and political newsflow having “weighed on investor sentiment”, according to chief executive Martin Gilbert.

Aberdeen hit by £32.8bn of net outflows

The figure – which was lower than the £33.9bn figure reported in 2015 - included £8bn of multi-asset and quantitative strategy “lower margin” insurance business, with Aberdeen braced for continued quarter-to-quarter fluctuation as volatility continues.

Net revenue was down 14% to just over £1bn, compared with £1.17bn in 2015.

Underlying pre-tax profits decreased from £491.6m to £352.7m with a final dividend of 12 pence per share, and 19.5 pence per share on the full year.

Final assets under management (AUM) however were £39.5bn, a little over 10% higher than the prior year, finishing the period with £312bn in AUM with thanks in part to a number of acquisitions.

Flag Capital Management – completed in 2015, Arden Asset Management, Advance Emerging Capital and Parmenion Capital Partners have all joined the Aberdeen stable widening its reach across the alternatives space, boosting technological capability and – through the latter three names - adding £9.5bn in AUM.

Having implemented the first £50m phase of its £70m cost-saving initiative, on a constant currency basis, 2016 costs have reduced by £28m, which Aberdeen said negated some of the cost of the acquisitions. However it added that sterling weakness pushed up its overseas costs by 1%.

Cash on the balance sheet remained “strong” at £548.8m, which it said was healthily above its minimum regulatory requirement.

Gilbert said the results reflected the group’s diversified business model and its cost controls.

“Structural themes including fee pressure, technological innovation and greater regulatory requirements are a focus for all asset managers,” he said.

“Aberdeen's broad range of investment capabilities and global distribution platform means we are well placed to address these challenges and also benefit from the opportunities they create.

“By continuing to invest in the business and by being a good steward of our customers money we are committed to helping our investors - from individuals through to institutions - achieve their financial goals.”

With fluctuations expected in markets and investor sentiment, Simon Troughton, the new chairman of Aberdeen’s board, added that diversification of the business, cost management and cash management would remain the group’s focus in 2017.

Looking ahead, Troughton said: “The asset management sector is facing three headwinds: fee pressure, increased investment in technology and regulatory capital requirements. We will continue to seek further cost efficiencies, whilst also being prepared to make appropriate investment in innovation and otherwise supporting the future growth of the business and motivating our diverse workforce.”

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