Aberdeen profits down amid fund outflows

The group reported net outflows across all its asset classes during the 12 months to September, totalling £32.8bn. Admittedly, this was slightly lower than the £33.9bn outflow suffered in the previous year. A positive market performance generated gains of £32.4bn, compared with a loss of £10.7bn in FY2015. This pushed total assets under management back past the £300bn mark at the year-end.

Nevertheless, a reduction in business meant net management fees fell below £1bn, from almost £1.15bn in the previous year, reducing net revenue. Outflows from higher-margin emerging market equities, debt and high-yield products and inflows into money market funds mean the blended fee rate also fell to below 34 basis points. The group also suffered £0.8bn in net outflows from property due to a reduced appetite for UK assets after the EU referendum.

However, recently appointed chairman Simon Troughton is optimistic about the growth potential in multi-asset funds, which were made a separate asset class during the year. Aberdeen grew the total managed here for insurance, pension and wealth clients in multi-asset funds to almost £90bn, due to investment gains. However, the company is developing more multi-asset products as it tries to diversify its business lines. Management also started to implement its cost efficiency programme, which reduced full-year operating costs by £28m. However the weakness of sterling pushed up overseas costs, offsetting this reduction.

Analysts at Peel Hunt expect adjusted pre-tax profits of £396m during the 12 months to September 2017, leading to EPS of 24p. This is up from £353m and 21p, respectively, in FY2016.