By Geoffrey Smith
biedexmarkets.com — Shares in Abrdn (LON:) hit a 12-month high on Tuesday after the asset manager promised to keep shareholder returns up despite outflows and poor portfolio performance that drove it to a loss last year.
Abrdn said it will keep total shareholder payouts, comprising dividends and buybacks, at around last year’s level of £600 million (£1=$1.211), with asset disposals expected to keep the company’s cash levels adequate.
It said on Tuesday that it will sell its discretionary fund management business Abrdn Capital, with £6.1B assets under management, to Liechtenstein-based LGT Wealth Management for £140M, adding to the £800M it raised last year through disposals.
By 09:15 ET (14:15 GMT), Abrdn stock was up 3.9% in London, its highest since early February 2022.
Investors are betting that the fund manager and financial adviser has turned a corner after a miserable year, which Chief Executive Stephen Bird called “one of the toughest investing years in living memory.”
Its investments in stocks and bonds were hammered last year by interest rate hikes by central banks around the world, while its home market in the U.K. suffered higher inflation and slower growth than anywhere else in the G7. Assets under management fell by 8% to £500B, with clients pulling a net £37.9B from its funds over the year.
Restructuring costs – mostly arising from its merger with Standard Life – ran to £214M over the year, adding to the pressure on profitability and pushing the company to a reported net loss of £615M from a profit of £1.12B in 2021.
The company also warned that it is facing further pressures from “changing client demand and preferences”, the sector’s usual euphemism for investors deserting more expensive actively-managed funds for cheaper, passively managed alternatives.
By contrast, it said it was pleased with trends at its financial advice division and with its retail investing platform interactive investor, which it bought last year. Its underlying operating profit more than doubled last year on a 38% rise in revenue.