Aberdeen Standard Investments has flagged improving performance for its Global Absolute Return Strategies as outflows at the mega fund slowed.
The £4.5bn ASI Gars strategy was still the biggest single source of net outflows last year, with clients pulling £10.6bn from the fund, according to ASI’s annual results. But this was down 40% from 2018 when it leaked £16.7bn.
Excluding the loss of the £41bn Lloyds mandate that was awarded to Schroders, net outflows across the board shrank to £17.4bn in 2019, a 60% drop from the £41.9bn it haemorrhaged the year prior.
ASI said the net outflows reflected pessimistic investor sentiment toward emerging markets and equities, as well as weak performance from its equity and multi-asset strategies in 2018.
In 2019 the fund group said 60% of total assets under management were ahead of benchmark over three years on a gross fee basis. Alongside Gars and its multi-asset strategies ASI said its fixed income, cash/liquidity and alternatives strategies had also delivered stronger performance last year.
Gars pulls ahead of rival funds
The outflows for its mega absolute return fund come despite a recent turnaround in performance.
Over one year Gars has returned 7.1%, putting it in the top quartile of peers in the IA Targeted Return sector. It is now ahead of the sector average over most time horizons apart from on a five-year view.
Gars vs IA Targeted Return sector
| 1y | 3y | 5y | 10y | |
| SLI Gars | 7.10 | 5.36 | 1.14 | 38.90 |
| IA Targeted Return | 1.32 | 1.67 | 4.90 | 22.45 |
Source: FE Fundinfo
Gars’ reversal of fortunes comes as other behemoths in the IA Targeted Return sector continue to suffer.
It now finds itself ahead of the £9.5bn Invesco Global Targeted Returns fund and the $2.5bn (£1.9bn) Merian Global Equity Absolute Return, the latter which has slumped into negative territory over one, three and five years.
But it is still lagging behind the BNY Mellon Real Return fund and on par with Aviva Investors’ Multi Strategy Target return fund.
Gars’ rivals performance
| 1y | 3y | 5y | 10y | |
| Invesco Global Targeted Returns | 5.26 | 1.92 | 7.07 | n/a |
| Merian Global Equity Absolute Return | -13.22 | -13.90 | -5.86 | 36.89 |
| BNY Mellon Real Return | 7.17 | 11.55 | 15.38 | 41.20 |
| Aviva Investors Multi-Strat Target | 8.54 | 2.89 | 4.88 | n/a |
Source: FE Fundinfo
Chief exec cautions on coronavirus turbulence
In its results ASI said persistent outflows had led to a 13% drop in revenue generated from fees to £1.6bn. This in turn dragged down pre-tax profits by 10% to £584m.
ASI ended 2019 with lower assets under management and administration of £544.6bn, down from £551.5bn the year before.
But parent company Standard Life Aberdeen’s share price rose 5% to 251p on the back of the results which were better than analysts expected.
Chief executive Keith Skeoch said the group remained on track to deliver on its targets next year despite the increased volatility from the coronavirus outbreak.
“We have seen growing momentum in the second half of the year across the business with improved investment performance and flows,” Skeoch said.
“The outlook for the markets and our industry in 2020 is turbulent with the additional complexity of Covid-19. Importantly we are focused on what we can control, namely delivering for our clients, customers, colleagues and shareholders; diversifying our revenues; investing for the future and maintaining financial discipline.”
