Standard Life Aberdeen outflows remain stable as integration 'on track'

Standard Life Aberdeen reported its investment funds continued to leak flows in the group's first update since its merger was finalised, though outflows lessened year on year.

Due to the strong momentum in global markets, assets under management and administration remained steady at £646.2bn at the end of September, down 1% over nine months but up 1% from the same point last year. This was slightly short of some analysts' forecast.

Net outflows of £20.3bn, of which gross inflows were £58.6bn, in the nine-month period, were therefore cancelled out by investment performance of £25.3bn, while there was a £3.7bn negative from corporate actions.

Within total AUMA, Aberdeen Standard Investments assets under management fell 1.8% since last December to £569.7bn while Standard Life pensions and savings assets under administration increased 1.1% to £182.3bn.

Channels identified for growth net outflows were stemmed to £10.6bn compared to £11.3bn in the same period last year, with investments growth channel net outflows increased by £1.5bn as institutional conditions were said to remain "challenging" and an increase of £4.5bn in outflows was partly offset by a £3.0bn improvement in outflows from the wholesale channel.

Record inflows were attracted into pensions and savings, increasing by £1.8bn or 40%, which management said demonstrated the benefits of diversification as well as the investment company business model.

Combined AUA across the Wrap and Elevate retail platforms topped £50bn after net inflows of £5.4bn over the nine months, while Parmenion, the discretionary arm brought by Aberdeen, enjoyed net flows of £1.0bn to take AUM to £4.0bn.

Within the mature books of business, there were net outflows of £12.8bn, very slightly higher than the same period last year, mostly out of the investments unit.

Joint chief executives Martin Gilbert and Keith Skeoch said the company was "making good progress towards creating a world-class investment company", with the integration of the investments businesses "on track".

They added: "While the combined business has experienced net outflows, these were in line with our expectations given the asset classes affected and the structural outflows from our lower margin mature books."

The quarter included the successful lPO of HDFC Life in India and the group's registration as a private securities fund manager in China.

SLA shares were flat at 414p after an hour of trading on Friday morning.

Numis said AUMA was 1.1% shy of its £666bn estimate, mainly reflecting net outflows and fund closures.

The broker calculated that stripping out 15p per share of surplus cash, 12p from HDFC IPO proceeds, the 88p HDFC Life residual investment and 15p from HDFC AMC, this would imply a core value of circa 283p for the core UK business.

"We also think the company might choose to distribute its HDFC related disposal proceeds via future special dividends: it has realised 12p per share so far in the HDFC Life IPO, might realise a further circa 5p if AMC IPOs and could realise further cash in either in any future disposal," analyst David McCann wrote.