One of the hardest years for investing in reminiscence, bemoans Abrdn boss as market turmoil rocks the Scottish funding home

Abrdn swung to a loss in what its boss referred to as ‘one of the hardest investing years in residing reminiscence’.

The FTSE 100 listed Scottish funding home’s poor efficiency got here because it battled opposed markets, rising shopper defections and a troublesome stock-picking atmosphere for its cash managers.

Under stress chief government Stephen Bird mentioned: ‘The international financial system modified dramatically throughout 2022.

Pressure: Abrdn chief exec Stephen Bird (pictured) said the investment house was battling adverse markets, rising client defections and a difficult stockpicking environment

Pressure: Abrdn chief exec Stephen Bird (pictured) mentioned the funding home was battling opposed markets, rising shopper defections and a troublesome stockpicking atmosphere

‘Almost all asset lessons dropped in worth as the price of cash soared to quell the rising tide of inflation.

‘The world in which we and our shoppers are working right now is radically totally different from the atmosphere of the previous decade.’

His feedback adopted a dismal set of outcomes in which the Edinburgh-based Abrdn posted a loss of £615million for 2022 following a revenue of £1.1billion the yr earlier than.

Net outflows from its funds hit £10.3billion as shoppers pulled their cash out – far worse than the £3.2billion it recorded in 2021.

The core investments division – the greatest half of Abrdn’s enterprise – noticed property below administration shrink by 19 per cent to £376billion as the worth of many equities and bonds fell in the face of rising international rates of interest. 

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It got here as Abrdn’s fund managers battled hovering inflation following Russia’s invasion of Ukraine, which pressured central banks to hike charges at a historic tempo to maintain costs from spiralling out of management. 

As a consequence, traders headed for the exit and markets fell round the globe. 

The Dow Jones misplaced 9 per cent final yr, the S&P declined 20 per cent and the Nasdaq was off 33 per cent. The FTSE 100 was the solely main index to eke out a achieve, up 1 per cent.

Abrdn rivals Jupiter and Schroders suffered comparable fates as the stock-picking commerce struggled to seek out winners amid big geopolitical uncertainty and recession fears.

John Moore, funding supervisor at RBC Brewin Dolphin, mentioned: ‘Outside oil, wider power and a few financial institution shares every part else was deemed excessive threat.

‘A excessive inflationary atmosphere makes it troublesome for mid and small cap shares, which aren’t producing big money. With no finish to the Ukraine warfare in sight that is more likely to proceed.’

Abrdn shouldn’t be the solely huge title to take a success – notably star inventory pickers Terry Smith and Nick Train additionally struggled to barter markets final yr.

Back in January, Smith launched a scathing assault on central banks for a protracted interval of ‘simple cash’ and warned that they now risked tipping the international financial system into recession as rates of interest proceed to rise to deal with sky-high inflation.

His flagship Fundsmith Equity fund suffered a 13.8 per cent drop in 2022. Moore added: ‘Terry had a tricky time.’

But a handful of cash managers have defied the strife, together with Man Group and St James’s Place (SJP).

Man yesterday posted income up 18 per cent to £779million for 2022 after the world’s largest publicly traded hedge fund agency noticed property below administration climb to £118billion at the finish of the yr.

Likewise SJP posted an increase in annual revenue, underpinned by sturdy new enterprise flows.

Analysts mentioned that Man benefited from its computer-driven macro funds, whereas SJP has developed a really sturdy retail enterprise. 

But Abrdn – which stays one of the greatest fund managers in the UK with £500billion of property and about a million small shareholders – has lots of work to do.

Born out of the sad merger of Standard Life and Aberdeen Asset Management in 2017, the agency employed Bird from Citigroup in 2020 to restructure the funding large. Under the former funding banker the agency has closed funds at a fast tempo in addition to promoting off property.

Yesterday it introduced the sale of its discretionary fund administration arm to a Liechtenstein-based personal financial institution for £140million.

But whereas some of the restructuring below Bird seems to be paying off and the agency’s Interactive Investor acquisition final yr has proved fruitful, for many in the City the turnaround shouldn’t be going down quick sufficient and endurance is operating skinny.

David McCann, analyst at Numis, mentioned: ‘We proceed to suppose {that a} extra radical technique is required to show the group round and to maximise worth, akin to the break-up of the group with capital being returned to shareholders, or sale of the group in full.’

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