News of its continued streak of outflows comes at a critical juncture before its union with emerging markets specialist Aberdeen, which has also been haunted by redemptions, on 14 August.
The unified Standard Life/Aberdeen will be the largest asset manager in Britain and the second largest in Europe, with £660bn of assets under management.
Though the overall group’s gross inflows “were resilient” at £20.7bn, higher redemptions of £24.4bn (versus last year’s £20.9bn), culminated in net flows of -£3.7bn (H1 2016: £0.9bn).
The vast majority of redemptions came from UK investors (£11.4bn), followed by North America (£2.2bn).
Shares in the FTSE 100 life insurer reacted poorly to news of more outflows, falling as much as 3% to £4.30 per share mid-morning.
SLI’s flagship multi-asset range Global Absolute Return Strategies (GARS) continued to be a drag on performance.
The strategy recorded negative net flows of £5.6bn, driven largely by “weaker short-term investment performance delivered in 2016”, which offset the £1.2bn inflows garnered by the institutional and wholesale unit.
Investors should not be surprised to see the multi-asset target return sector struggling, said The Adviser Centre CIO Peter Toogood, in the current distorted boom phase propped up by “easy street” monetary policy.
“The likes of GARS, and others of a similar ilk, are simply not designed to prosper in these types of markets,” he explained.
“Investment opportunities are few and far between, with every possible investment idea predicated on the maintenance of the grand central bank liquidity party.
“With true price discovery in risk assets so heavily distorted, relative value trades are a struggle; mean reversion theory no longer works and creating a central scenario for risk assets is plagued by the whims of policy makers and bankers alike. When the game is fixed, staying invested in relatively simple bond and equity vehicles can be highly rewarding.
Its pension divisions fared better over the first half of the year, however, delivering £4.2bn in net flows and bringing AUA 8% higher to £108.5bn.
The group’s total AUA was 1% higher at £361.9bn.
Shareholders will be likely relieved by the fact that the group grew its operating profit by 6% to £362m and fee based revenue was up 5% at £836m.
Standard Life chief executive Keith Skeoch maintained a positive outlook for the firm’s future with Aberdeen, stating that the group was “ready to accelerate the pace of strategic delivery as we open the next chapter of our transformation to a diversified world-class investment company”.
“The combined leadership team of Standard Life and Aberdeen has been working well together to ensure ‘Day 1’ readiness,” he added.
“We are well placed to continue to meet changing client and customer needs globally, and to generate growing and sustainable returns for our shareholders.”
