STANDARD Life Aberdeen reported a sharp rise in net outflows during a turbulent year for the global fund management sector, as Martin Gilbert stepped down as joint chief executive to end the “noise” surrounding the firm’s co-leadership structure.
The Edinburgh-based investment giant appointed Keith Skeoch as sole chief executive as it recorded net outflows of £40.9 billion for 2018, compared with £32.9bn the year before.
And it warned that the continuing macroeconomic and political backdrop, including the ongoing uncertainty over Brexit, was continuing to affect investor sentiment this year.
The company said 2018 had seen the weak performance of its flagship GARS (Global Absolute Returns Strategies) fund and most equity classes, outside Asia Pacific, continue. It reported that assets managed by Aberdeen Standard Investments, its main fund management business, decreased to £505.1bn from £561.1bn, while retail assets under administration grew to £54.2bn from £54bn.
Mr Gilbert declared that the net outflows seen by the firm last year were “really an industry issue”, stating that smaller fund managers have been seeing bigger outflows in percentage terms.
He said: “The fourth quarter of last year was really tough in terms of markets. A lot of the industry was in outflow.”
But he added that sentiment was still “not great” in light of uncertainties such as Brexit.
While outflows increased, the firm underlined the rise in gross inflows or new sales generated last year, which climbed to £75.2bn from £72.4bn. The company said its gross inflows were “well diversified across a broad range of ‘new active’ capabilities.”
Mr Skeoch said: “What is driving our gross flows is the new business we are winning, and that is from all the innovation that we have being doing.
He added: “The big redemptions are in GARS, Asian equities, global emerging market equities and global where we have had a performance issue, and that is improving.”
Standard Life Aberdeen (SLA) has been led jointly by Mr Skeoch and Mr Gilbert since the £11bn merger of Standard Life and Aberdeen Asset Management in 2017. But the logic behind having two bosses has routinely been called into question.
Mr Skeoch, formerly chief executive of Standard Life, has now taken sole charge, while Mr Gilbert, who co-founded and built up Aberdeen over many years, will remain a full-time executive as vice chairman. SLA said the change means Mr Gilbert will be able to focus solely on strategic relationships with key clients and winning new business. His basic salary will remain unchanged at £600,000, though the maximum percentage of bonus payable to him will be reduced to 350%
from 600%.
The company also said that Bill Rattray, who joined Aberdeen 34 years ago, will retire from the board on May 31. Mr Rattray was appointed finance director at Aberdeen since 1991, and joined the board of SLA in August 2017.
He will be replaced by Stephanie Bruce, who will take up the post of chief financial officer on June 1.
Mr Gilbert said he approached Sir Douglas Flint shortly after his appointment as chairman to suggest ending the dual leadership, following talks with Mr Skeoch. Asked whether criticism of the firm’s investment performance had been a factor, Mr Gilbert said: “The interesting thing was that there was no pressure from shareholders. They all understood the need for it, and it would run its course eventually.
“When I say noise I [mean] distraction, too much focus on it rather than on how well we were doing in the business, which is shown by the way the share price has reacted today.
“Holding the dividend [is] great. It has got a great yield per share. That sort of thing was being overshadowed by what we felt was too much noise. We just want to get on with running the business, without the distraction.”
He added that, with the integration of Standard Life and Aberdeen Asset Management now 75% complete, it was the “right time”. The integration is on track to make savings of at least £350m.
Last year saw SLA sell its UK and European insurance business to Phoenix for £3.3 billion. The deal will see some 3,200 SLA staff transfer to Phoenix, which will have operational headquarters in the city.
The Scottish firm will have 2,500 staff in Edinburgh and operations around the world.
Meanwhile, Mr Skeoch said both the company and the wider fund management sector was well prepared for Brexit, with SLA having established bases in Dublin and Luxembourg. Asked what he would regard to be the best outcome from this week’s Brexit votes, he added: “We would just like some certainty about what is going to happen.”
SLA announced a final dividend of 14.3p per share, taking the total dividend to 21.6p – up 1.4%.
Shares closed up 2.3%, or 5.8p, at 250.8p.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here