Abrdn faces eviction from FTSE100

The asset manager has seen a 37% slump in its share price so far this year, taking its market capitalisation to around £3.3bn.

Abrdn released its latest financial results earlier this month.

Total net outflows for the first six months of this year were £35.9bn (H1 2021: £5.6bn), including a final Lloyds Banking Group tranche withdrawal of £24.4bn.

It reported an IFRS loss before tax of £320m, in comparison to a profit of £113m in the first half of 2021. Abrdn said this was largely due to losses of £313m from the change in value of several significant listed investments during the period.

Abrdn’s assets under management and advice ended the half at £508bn, a drop of almost 7% from the end of 2021.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “Huge geopolitical uncertainty, sky high inflation and worries about economic growth have been challenging for the asset management sector, and Abrdn’s weaker performance in this environment looks set to propel it out of the big league.

“Operating profits came in lower than expected as fund flows reduced further. But this isn’t just a recent problem, assets have been walking out the door for years. It’s Environmental, Social and Governance (ESG) options currently lag peers, and demand for ESG investments is on the rise, which puts it in a tricky position.

“It’s been trying to keep revenue moving in the right direction through acquisitions. It now owns Interactive Investor, which should provide a relatively stable source of assets for the group given its one of the UK’s biggest direct-to-consumer investment platforms. The majority of the funds abrdn manages have been able to deliver investment returns ahead of their benchmark – which is a key requirement if fund investors are to be tempted back.”

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While the parent company has been taking a financial hit so far this year, profits for Abrdn’s advice arm rose 75% year-on-year in the first half of 2022.

Adjusted operating profit rose to £7m, with £6m generated by its latest acquisition Interactive Investor, according to half year results released earlier this month. 

Abrdn completed the acquisition of Interactive Investor for £1.49bn in May.

After a restructuring, Abrdn’s ‘Personal Vector’ arm now includes Financial Planning, digital retirement advice, discretionary wealth and ISA and digital investing.

The firm said fee-based revenue rose 41% to £58m for the half. Net flows were £0.3bn, including June’s £0.2bn of inflows from Interactive Investor.

Total discretionary client numbers remained constant at around 16,000.

Personal Wealth, Abrdn’s Financial Planning operations within the Personal Vector, saw underlying performance remain stable with £1m of adjusted operating profit.

Assets under management for the Planning business fell in the six months to 30 June 7.6% to £13.3bn. Net flows were £0.1bn (H1 2021: £0.5bn) due to broader market uncertainty.

Abrdn recently appointed a new head for its advice arm with existing CEO Caroline Connellan stepping down after less than a year in the role.

Richard Wilson, CEO at Interactive Investor, took on an expanded role as CEO of Abrdn’s Personal Vector advice business last month.

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