Asset manager abrdn to axe 500

British asset manager abrdn confirmed plans to axe 500 roles as part of deep cost cuts on Wednesday after suffering worse-than-expected outflows of client cash in the second half of 2023.

Abrdn and other active asset managers have been grappling with turbulent markets and growing competition from lowcost passive investors.

The Edinburgh-based company reported net outflows of £12.4bn for the period, more than double the £5.2bn withdrawn in the first six months of 2023, in a trading update ahead of full-year results in February.

CEO Stephen Bird told reporters it is “hard sledding” for the overall fund industry, with higher interest rates making investments that tracked rates more attractive. Rivals including US fund giant BlackRock are also cutting jobs, he added.

RESTORATION

When asked about an earlier media report that said he had pitched to sell the company’s underperforming investment management arm, Bird said the company has tested every scenario but is focused on keeping and restoring the business.

The company also confirmed media reports on Tuesday that it would shed about 10% of its total workforce. Abrdn said on Wednesday it aimed to cut £150m of costs by 2025.

ANALYSTS SAID THE OUTFLOWS REMAIN A MAJOR CONCERN IN THE LONG TERM, BUT INVESTORS WOULD WELCOME THE COST-CUTTING

Shares in abrdn were up 2.6% in the afternoon after falling as much as 3.8% in early trading. They fell 3.2% the previous day on the reports of its cost cutting.

Analysts at JPMorgan said in a note the outflows remain a major concern in the long term, but investors would welcome the cost-cutting, which is likely to lead to analyst upgrades of earnings forecasts.

PROFITABILITY

Bird said the cuts sought to restore the company’s investment business to an “acceptable level of profitability” and would be focused mainly on back office roles. They will be largely implemented in 2024 and completed in 2025, he added.

The fund manager said its assets under management and administration dipped over the period to £494.9bn, from £495.7bn at the end of June.

Abrdn’s shares have lost half their value since the company was formed from the 2017 merger of Standard Life and Aberdeen Asset Management.

It dropped out of Britain’s blue-chip FTSE 100 share index in 2023.

Bird, who took charge in 2020, has tried to revive its performance by trimming costs and expanding into UK massmarket investing through its acquisition of online platform Interactive Investor in 2022.

The company has already shed some jobs, reduced its range of funds and sold noncore assets.