Asset management firms have been confronting a difficult landscape marked by sustained pressures from passive investment alternatives, rising technology expenses, and increasing regulatory costs. These challenges, coupled with distorted market conditions that have hindered investment performance, have compelled many managers to reassess and recalibrate their strategies to preserve client assets and stimulate growth.
Impex illustrates the strain on certain niche players, experiencing a roughly 46 percent decline in assets under management (AUM) over the past two years. This downturn has largely been attributed to waning interest in its area of specialization—sustainable investments—reflecting a broader shift in investor sentiment. In contrast, Polar Capital has managed to avoid significant outflows, buoyed by a strong track record in performance. Its portfolio concentration in technology, which constitutes 55 percent of its AUM, as well as healthcare and financials sectors, has helped maintain investor confidence. The firm plans to continue focusing resources on sectors where it holds a competitive advantage and where demand remains robust.
Liontrust Asset Management also faced outflows amid reduced demand for its quality growth and small-cap strategies. In response, the firm has pursued diversification to broaden its appeal. It recently acquired River Global to add value-style investment options and is in the process of buying Hawksmoor Fund Management. The Hawksmoor acquisition, which will add approximately £1.9 billion in AUM to Liontrust’s existing £24 billion, is intended to expand its range of funds targeted at financial advisers, including more model portfolios. Improved fund performance is also contributing to a gradual reversal of net outflows.
Aberdeen faces its own challenges, including outflows from funds managed on behalf of institutional clients such as insurance companies. However, the firm is leveraging its retail investor platform, Interactive Investor, acquired four years ago, as a strategic asset. Interactive Investor has delivered robust net inflows, attracting £2.5 billion during the recent period, providing Aberdeen with a substantial and engaged client base.
Despite overall net outflows of £300 million in the third quarter—disappointing relative to analysts’ expectations of £800 million inflows—Aberdeen reported modest growth in combined assets under management and administration, standing at £579 million as of September 30, up 4 percent year-to-date but flat quarter-on-quarter. Positive momentum was observed in the institutional and retail wealth segment, which returned to net inflows of £500 million during the quarter.
Looking ahead, Aberdeen’s management anticipates an adjusted operating profit of at least £300 million and net capital generation near the same figure for the year. Market participants remain attentive to any potential mergers and acquisitions activity that could further enhance shareholder value as asset managers navigate an evolving and challenging market environment.