Investment group

Investment group Abrn drops to £289m in first half

Abrn drops to £289m in first half as UK asset manager’s woes are compounded by market volatility

  • The Scottish fund manager announced a loss of £289m in the first half
  • Losses were partially impacted by a significant decline in assets under management
  • Following the trade update, shares of Abrn were the best fallers on the FTSE 100

Abrdn plunged into a loss in the first half as the company’s performance was affected by turbulent market conditions and macroeconomic uncertainty.

The Scottish fund manager fell to a loss of £289m in the first half of 2022 from a profit of £102m the previous year as it warned that revenue and profitability targets could take longer longer than expected to reach.

Abrdn mainly blamed the loss on the decline in value of its major listed investments, which include insurer Phoenix Group, and the life insurance and asset management arms of India-based Housing Development Finance Corporation. .

Reversal of fortune: Scottish fund manager Abrdn said it plunged into a loss of £289m in the first half of 2022, from a profit of £102m the previous year

Losses were also impacted by an 8% drop in fee-based revenue due to much weaker results from the company’s investment division, where there was a significant decline in overall assets under management. .

This was primarily due to Lloyds Banking Group withdrawing the last £24.4bn of pension assets it had previously entrusted to the firm for management, and adverse equity and asset market movements to fixed income.

Lower trading in the investment arm offset stronger performance in Abrn’s financial advisory and personal businesses, both of which saw higher revenue and underlying earnings.

Chief executive Stephen Bird said the results “largely reflect the challenging global economic environment and market turbulence”.

Following the trading update, Abrn shares became the biggest drop in the FTSE 100 index, down 6.8%, or 11.8p, to 161.15p on Tuesday.

Fund managers are seeing increased outflows as cautious investors shun riskier investments amid soaring inflation.

Market uncertainty “means that our ambitions for revenue growth and improved cost-to-income ratio will likely take longer than originally anticipated,” Abrn said in a statement.

The fund manager had forecast a cost-income ratio of 70% in 2023, which he said is now likely to be delayed.

But despite the downgraded outlook, the company expects second-half revenue to be boosted by performance fees and its newly acquired subsidiary Interactive Investor.

Abrdn bought the UK’s second-largest retail investment platform for £1.5bn earlier this year, attracting more than 400,000 additional clients under its heading.

He also expects to benefit more from the majority stake he bought in Tritax, a property fund manager, which is investing in a planned gigafactory based in the northeast of England to manufacture batteries for electric vehicles.

John Moore, Chief Investment Officer at Brewin Dolphin, said: “After a difficult year, between market turmoil and a restructuring of its business, Abrn finds itself on the brink of the FTSE 100.”

He added: “The purchase of Tritax and Interactive Investor has reshaped the business and appears to be working well, but there are still some strategic moves needed to get the fund manager back on track.”

“Abrn looks certain to be relegated from the top London index unless he can pull something out of the bag in the short term.”