Standard Life Investments’ global absolute return strategies range has been hit by outflows again as the manager attempts to stem the flow of assets from the product.
Standard Life’s half year results today reveal that GARS, which targets cash plus 5 per cent over three years with minimum risk, saw £5.6bn in net outflows over the first six months of the year. £2.8bn came in the first quarter.
The provider said this resulted from “a period of weak short-term investment performance” last year, but that short term investment performance has bounced back so far in 2017.
GARS returned 4.4 per cent in the year to the end of June, the results show.
Overall, SLI’s assets under management decreased by 1 per cent to £275.2bn.
“Net outflows from our GARS products and the run-off of our mature books, were both largely offset by positive market movements,” SLI noted.
Net outflows of £7.4bn across SLI were greater than some analysts had expected, through many predictions were for more than £5bn to leave the books.
Speaking to Money Marketing earlier this year, Aberdeen Asset Management – which is due to complete its merger with Standard Life next week – global head of distribution Campbell Fleming said that the combined firm would benefit from bringing together SLI’s Gars with other multi-asset strategies.
The Adviser Centre chief investment officer Peter Toogood says: “As risk markets enter the boom phase based on the continuation of monetary ‘easy street’, investors should not be surprised to see the multi-asset target return sector struggling.
“Investment opportunities are few and far between, with every possible investment idea predicated on the maintenance of the grand central bank liquidity party. With true price discovery in risk assets so heavily distorted, relative value trades are a struggle; mean reversion theory no longer works and creating a central scenario for risk assets is plagued by the whims of policy makers and bankers alike.
“The likes of GARS, and others of a similar ilk, are simply not designed to prosper in these types of markets. This is particularly true at this point, when investment professionals are nervous, even as market participants get more bullish.
“What is up for debate is the nature of the self-imposed targets that these funds set themselves. RPI plus targets were always going to be challenging, and never more so than now.”