Redemptions at Abrdn have fallen 80% in a “reset year” for the business, which has seen it rebrand and splurge on platform giant Interactive Investor, but Man Group’s share buyback strategy has proved far more lucrative for its business.
Clients pulled £6.2bn from Abrdn in 2021, a substantial drop from the £29bn that exited the year before. Its investment business saw a “marked improvement” in flows, with redemptions halving from £15.8bn in 2020 to £7.6bn in 2021.
Despite the slowing redemptions, assets under management nudged up by only 1% from £535bn to £542bn.
Abrdn reported its first full-year increase in revenue since the business was born out of the merger of Standard Life and Aberdeen Asset Management in 2017.
Fee based revenue rose 6% year-on-year from £1.4bn to £1.5bn, which boosted operating profit by 47% to £323m.
However, this was not enough to cheer markets, with shares down close to 6% at the time of writing.
CEO Stephen Bird (pictured) dubbed 2021 as Abrdn’s “reset year”.
“In 2021 we set out a clear strategy for how we will create long-term sustainable growth and arrest the decline in revenue,” he said.
“Strategically, we have made huge strides forward. We have simplified and extended the relationship with our largest client, Phoenix. We have successfully rebranded as Abrdn which gives us a unified global identity and purpose. We have divested non-core assets and built out our capabilities across our three vectors, including in private markets and digital content.
“More broadly, we have sharpened the focus of our Investments business to identify the key areas where we have a true competitive advantage. And, late in the year, we announced our proposed acquisition of Interactive Investor – a transaction that transforms our Personal vector, diversifies group revenues and significantly expands our client reach.”
Man Group smashes record AUM
But Abrdn was overshadowed by Man Group on the day, which reported AUM hit a record $148.6bn in 2021.
The 20% leap in AUM was driven by a spike in net inflows, which rose from $1.8bn in 2020 to $13.7bn last year, as well as $12.5bn of positive investment performance.
Man Group posted a 139% increase in core earnings per share to 38.7¢ over the period driven by 52% growth in management fees and “material” performance fees, which were up 290% on the year before.
Unlike Abrdn, Man Group has shunned M&A activity, focusing instead on distributing cash to shareholders via higher dividend payments and share buybacks. Last year it announced $350m worth of share buy backs on top of a 14.0¢ dividend payment, up from 10.6¢ in 2020. This generated around $500m of total returns for shareholders.
Its strategy has resulted in stellar performance, with shares up over 50% in 2021.
By forgoing the M&A route it has also built up a strong balance sheet compared with other fund groups, with a cash surplus of $323m.
“2021 was an exceptionally strong period of growth for the firm,” chief executive Luke Ellis said. “These results demonstrate the potential of the firm we have built and its ability to deliver growth. Our diversified range of products and longstanding client relationships, combined with our diverse talent pool and cutting-edge technology, define Man Group, underpin our strategy and give me great confidence in our ability to continue to deliver value for our clients and shareholders.”