Standard Life’s profits increased to £723m during 2016 but its Global Absolute Return Strategies fund was hit by net outflows of £4.3bn.
Assets under administration increase by 16 per cent to £357.1bn despite outflows of £2.6bn, which represented less than 1 per cent of opening assets.
Since reaching a peak in April last year, the Gars fund has since seen a reversal of its performance, returning only 0.4 per cent in the past 12 months compared to the IA Targeted Absolute Return sector which returned 3.34 per cent.
This has been attributed to “strategic bets” which could have dented returns.
In its results the company said it had improved its cost to income ratio through measures such as the integration of Ignis Asset Management, which delivered £50m in savings.
Keith Skeoch, chief executive of Standard Life, said: “Despite industry headwinds, we are benefiting from our strengthening global brand and strong long-term relationships with a well diversified range of clients and customers.
“The acquisition of Elevate has strengthened our leading position in the advised platform market while the increase in the stake in HDFC Life and the proposed combination with Max Life will increase our exposure to the attractive and fast growing Indian market.
“We are already seeing the benefits of targeted investments to further our diversification agenda, including the success of our newer investment solutions, and the sharpened focus on operational efficiency.
“This increased pace of strategic delivery will ensure that we continue to meet changing client and customer needs, and generate growing and sustainable returns for our shareholders.”
The results also revealed Standard Life was setting aside £175m for the Financial Conduct Authority's review of non-advised annuity sales practices.
Standard Life said its acquisition of Axa’s Elevate platform and its bid to expand its financial advice business 1825 would impact its attempts to reduce costs in the short term but it said the “underlying direction” remains unchanged.
Operating expenses increased by 3 per cent to £1.159bn, which was directly attributed to both these activities.
But it said both these developments would allow the company to scale up, which would benefit Standard Life in the long-term.
damian.fantato@ft.com
