Scottish investment heavyweight abrdn has provided signs that it is on the road to recovery after a torrid few years but will face significant challenges following a recent boardroom upheaval.

The Edinburgh-based company grew first half underlying profits by £1 million to £128m helped by an increase in the amount of funds it invests on behalf of clients or helps them to administer, which was small but welcome.

Interim chief executive Jason Windsor said the company has been making good progress with its efforts to increase efficiency and to bolster its positions in attractive markets.

Abrdn manages funds for clients, provides platforms on which financial advisers administer client portfolios and also owns the Interactive Investor business. This targets retail investors.

Total assets under management or administration increased to £505.9bn in the six months to June 30, from £494.9bn in the same period last time.

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John Moore at the RBC Brewin Dolphin wealth management business said the results showed abrdn was on a “reasonable direction of travel” following a period of flux.

As abrdn has long been a mainstay of the financial sector in Scotland, the upbeat view will be welcomed in the country. It follows a period during which the outlook for the company seemed uncertain.

Former chief executive Stephen Bird departed abruptly in May after less than four years in charge.

While abrdn chairman Douglas Flint said Mr Bird had spearheaded a fundamental reshaping of the company, some sector watchers suggested it should be broken up or sold.

In January abrdn announced plans to cut around 500 jobs under a transformation programme which was intended to secure £150m cost savings.

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The fact the programme was felt to be required raised questions about the changes made under Mr Bird’s leadership.

He took charge in September 2020 three years after the group was created following an £11 bn merger between pensions giant Standard Life and Aberdeen Asset Management.

The enlarged group sold its pension business to Phoenix after deciding to focus on fund management only to find its performance in that sector falling well below expectations.

The group suffered big outflows of funds following the merger.

Against that backdrop, Mr Bird’s decision to ditch the Standard Life Aberdeen name in favour of abrdn in April 2021 provoked ridicule.

The £1.5bn acquisition of Interactive Investor which Mr Bird announced eight months later appears to have been more successful.

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However, abrdn remains heavily reliant on a fund management operation that faces big challenges. Many investors are giving up on the kind of active management of equities that abrdn focuses on and shifting their assets into passive index-tracking funds.

The outlook for international markets is unclear.

Abrdn’s investment business suffered £1bn net outflows in the first half. The company said: “Improving the investment performance of our equity funds overall remains a priority, particularly in Asia and Emerging Markets where we have a significant concentration.”