Aberdeen Asset Management says the integration of Scottish Widows Investment Partnership (SWIP) is on schedule.
Aberdeen acquired SWIP in March this year and Martin Gilbert, CEO of Aberdeen, used today’s announcement of its Interim Management Statement (for the nine months to 30 June, 2014) to declare: “The process of integrating the SWIP business into the Aberdeen Group is proceeding in accordance with our expectations, both on timing and in delivering cost synergies, and we believe that the front office integration will be largely complete by the end of this year.
“There will inevitably be some short term rationalisation of the SWIP assets under management ("AuM") during this period and we have therefore disclosed the SWIP new business flows separately from the Aberdeen flows for the quarter to 30 June 2014 and we will also do so for the next quarter.
“We have now finalised the structure of our enhanced Investment Solutions capability, which is a significant element of the overall Aberdeen Solutions AuM. By combining the two legacy teams, we now have a well-resourced and experienced team dedicated to developing and delivering innovative solutions for our clients.”
Assets under management at 30 June, 2014, totalled £322.5bn, down from £324.5bn at 31 March, 2014.
Outflows came in at £8.8bn, twice what was expected. This was made up of £5.5bn from Aberdeen and £3.3bn from SWIP.
Gilbert said in his statement: “The Aberdeen new business flows for the quarter were affected by the withdrawal by a single client of approximately £4 billion of low margin AuM from our Asia Pacific and global equities strategies during the quarter. Excluding this withdrawal, the underlying flows for the quarter have a more encouraging tone: net outflows from global emerging market equities reduced to only £0.2 billion, Asia Pacific contributed £0.1 billion of net inflows and global equities saw net outflows of £0.3 billion. In fixed income, our emerging market debt funds remain in demand, contributing £0.7 billion of net inflows in the quarter. We have seen this more encouraging trend continue in July.
“Overall net outflows from the SWIP business totalled £3.3 billion in the quarter. Much of this arose from anticipated outflows from certain elements of the acquired business, together with seasonal outflows from low margin liquidity funds. However, it is notable that SWIP’s property capability attracted £0.2 billion of net inflows during the quarter. We have also reached agreement with one external client to reorganise the mix of their portfolios which will not change the AuM but will bring some revenue benefit from early in our next financial year.”
As for the first-half performance and future, Gilbert said: “Our equity funds have delivered healthy outperformance against their respective benchmarks during the first half of 2014, reflecting our consistent focus on investing in good quality companies for the long term, and thus maintaining our strong long term performance numbers. Fixed income performance has also continued steadily ahead of benchmark.
“We have seen some improvement in investor sentiment towards emerging market and Asia Pacific equities in the latest quarter, and our distribution team is seeing encouraging interest from investors in our broader product range. While we remain cautious on market sentiment in the short term, we remain confident that we can continue to build the Group’s revenue and profit through further organic growth.”