Standard Life posts net outflows on volatile markets
Redemptions hit net US$21.5bil in the first half
LONDON: Standard Life Aberdeen Plc is still hemorrhaging client cash.
Redemptions reached a net £16.6bil (US$21.5bil) in the first half in the latest sign that investors remain nervous about market volatility and economic uncertainty.
It’s more bad news for a company that was created in a merger a year ago, only for Lloyds Banking Group Plc to announce plans six months later to pull the Scottish firm’s biggest mandate.
“Conditions for the asset management industry continue to be challenging,” Standard Life co-chief executive officers Martin Gilbert and Keith Skeoch said in a statement.
“We are actively taking steps to improve our investment performance in key areas.”
The pain suffered by Standard Life is symptomatic of the woes of Europe’s asset-management industry, where client outflows are adding to long-felt issues ranging from squeezed margins and regulatory headaches to competition from cheaper passive funds.
One obvious solution is to consolidate, but the example of the Edinburgh-based firm shows that mergers can create as many problems as they solve.
When Lloyds gave notice of its plan to withdraw £109bil from the Scottish company, it said it was because the Aberdeen-Standard Life tie-up put the money manager into competition with the bank’s own insurance unit. Standard Life is challenging Lloyds’ decision.
Aberdeen Standard Investments, the asset management unit, had net outflows of £19.2bil in the first half.
The market had expected £17.8bil in net outflows, based on 16 analyst forecasts compiled by the money manager.
The two companies that formed the asset manager had been losing client cash even before the August 2017 merger.
The old Standard Life had £3.7bil of net outflows in the first half of last year as clients pulled money from its flagship fund, while Aberdeen Asset Management also headed into the marriage shedding investor cash.
The sale of Standard Life’s insurance unit to Phoenix Group Holdings, which is aimed at turning the Scottish firm into a capital-light investment company, is due to be completed in the third quarter.
Standard Life has said it plans to cut costs and return money to shareholders as a result of the deal.
Gross inflows of £38bil in first half compared with £39.5bil in the same period a year earlierAssets under management fell to £610.1bil from £627bil a year earlier. — Bloomberg
Conditions for the asset management industry continue to be challenging.