Asset manager Abrdn has reported shrinking assets and a decline in profits at its investment division, as it said this year has turned out to be “one of the toughest investing years in living memory”.
The FTSE 100-listed financials saw its shares fall by a tenth on Tuesday after announcing its financial results for the last 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.
This was led by a 16% increase in net outflows to £4.4bn as more people with disabilities took money out of funds and investments.
If 2022 was one of the most difficult years to invest in living memory, 2023 looks set to be just as challenging
This reflects customer reaction to the increased cost of living, as well as high inflation and interest rates, which weighed on demand for consulting services, the company said.
“If 2022 was one of the most challenging years for investing in living memory, 2023 looks set to be just as challenging,” said CEO Stephen Bird.
“Geopolitical risk is back. Inflation is back. Credit risk is back.
“The changing dynamics and challenges within traditional wealth management are well known – the relentless rise of passive and index investing, the democratization of technology and finance, and the faster growth of alternatives are all ongoing themes.”
Still, outflows for the investment and advisory divisions were partially offset by revenue of around £1.9 billion for Interactive Investor, the investment platform Abrdn acquired last year.
In addition, the company saw its adjusted operating profit rise by a tenth to £127m in the last half-year and revenue rose slightly.
The vast majority of its profits have come from its human resources and consulting lines of business, the group said.
The investment division’s profit collapsed by two-thirds in the first half of the year.
Abrdn, which was known as Standard Life Aberdeen until it removed the vowels in its name in 2021, said it was on track to deliver £75m in cost savings for its investment division by the end of the year these restore a “more acceptable level of profitability”.
Despite the difficult conditions, the company said it would return a further £150m to shareholders through buybacks.
https://www.standard.co.uk/business/business-news/abrdn-flags-tough-investing-year-on-par-with-2022-as-assets-shrink-b1099336.html Abrdn anticipates a tough investment year on par with 2022 as assets shrink