Gars outflows hit margins at Standard Life Aberdeen

Fee revenue drops in H1 having neared £1bn last year


Standard Life Aberdeen has blamed outflows from high-margin strategies such as SLI Gars for its lower fee revenue in its half-year results.

Over the six-month period ended 30 June, the asset manager’s assets under management rose 5% from £551.5bn to £577.5bn. Market movements contributed £41.2bn to AUM offsetting £15.9bn in net outflows “concentrated in a narrow range of strategies”.

AUM was down from £592.1bn in H1 2018 and fee revenues was £815m in the latest results compared to £966m for the same period last year.

Standard Life Aberdeen blamed the “mix effect of outflows from higher margin products including Gars and equities”. The results noted outflows had reduced from the absolute return team that runs Gars due to improving performance.

Gars performance improves

ASI Global Absolute Return Strategies3.322.742.764.9247.43
IA Targeted Absolute Return1.550.094.239.2629.07
Libor GBP 6 Months0.450.942.113.568.36
Source: FE Analytics

Overall revenue margins at the business fell from 31.5 basis points to 28bps.

Lloyds aids AUM

Nevertheless, chief executive Keith Skeoch said inflows had been more diverse and he was pleased the business had retained £35bn from its Lloyds Banking Group mandate, including £30bn of passive assets due to go to Blackrock and £5bn of real estate assets due to go to Schroders.

“This, combined with lower redemptions and better markets, has helped us to increase assets by 5% to £577bn. Our focus on efficiency has delivered more cost savings, which combined with the benefits of share buybacks, has helped to increase earnings per share to 8.9p.”

The results said a £140m settlement from Lloyds would be included in the profit and losses for H2 2019.

Virgin and Gresham House partnerships

Standard Life Aberdeen has made progress in building the UK savings “ecosystem”, the results said. This included the £3.5bn it had acquired via a joint venture with Virgin Money and its partnership with Skipton Building Society to provide access to £15bn.

The 1925 acquisitions of BDO Northern Ireland and Grant Thornton UK had increased assets under advice by around 40% to £6bn, the results noted.

The results also highlighted the distribution joint venture with Gresham House.

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