abrdn.com
Annual report
and accounts
2023
Three years ago, we set out to
fundamentally reshape our business.
Against a challenging backdrop, our
strategy has formed a company that is
better positioned for growth, driven by
the evolving needs of our clients and
customers.
Our reporting suite
This report forms part of our reporting suite.
This annual report and accounts 2023 for abrdn plc, and the
strategic report and financial highlights 2023 are published on
our website at www.abrdn.com/annualreport
Access to the website is available outside the UK, where
comparable information may be different.
Certain measures such as adjusted operating profit,
adjusted profit before tax, adjusted capital generation and
cost/income ratio, are not defined under International
Financial Reporting Standards (IFRS) and are therefore
termed alternative performance measures (APMs).
APMs should be read together with the Group’s consolidated
income statement, consolidated statement of financial position
and consolidated statement of cash flows, which are presented
in the Group financial statements section of this report. Further
details on APMs are included in Supplementary information.
See Supplementary information for details on assets under
management and administration (AUMA), net flows and the
investment performance calculation. Net flows in the Highlights
page excludes liquidity flows as they are volatile and lower
margin. It also excludes Lloyds Banking Group (LBG) tranche
withdrawals in 2022 relating to the settlement of arbitration
with LBG.
Sustainability and TCFD report
The focus of this report is to extend our
climate-related disclosure beyond our
Annual report and update on other
material sustainability topics for abrdn.
Stewardship report
Sets out our application of the 12
principles of the UK Stewardship Code,
as investors.
Modern slavery statement
Our disclosure in line with the UK Modern
Slavery Act, detailing our work to
mitigate related risks.
APM
Contents
Strategic report
At a glance 2
Chairman’s statement 6
Chief Executive Officer’s review 9
Our business model and strategy 12
Performance overview 18
Our businesses 20
Sustainability 38
Key performance indicators 60
Chief Financial Officer’s overview 62
Risk management 76
Governance
Board of Directors 82
Corporate governance statement 86
Audit Committee report 98
Risk and Capital Committee report 107
Nomination and Governance Committee report 111
Directors’ remuneration report 115
Directors’ report 135
Statement of Directors’ responsibilities 141
Financial information
Independent auditor’s report 144
Group financial statements 160
Company financial statements 271
Supplementary information 286
Other information
Glossary 300
Shareholder information 303
Forward-looking statements 304
Contact us IBC
This symbol indicates further information is available within
this document or on our corporate website.
Download this report from: www.abrdn.com/annualreport
Highlights
Adjusted operating profit
£249m
2022: £263m
IFRS loss before tax
(£6m)
2022: (£612m)
1
Full year dividend per share
14.6p
2022: 14.6p
Investment performance
(% of AUM above benchmark over three years)
42%
2022: 65%
Net flows
(Excl. liquidity and LBG)
£13.9bn
outflow
2022: £10.3bn outflow
MSCI ESG rating
AA
2022: AAA
1. Comparatives have been restated for the HASL
implementation of IFRS 17. Refer Basis of preparation
in the Group financial statements section.
APM
STRATEGIC REPORT
1abrdn.comAnnual report 2023
STRATEGIC REPORT
1abrdn.comAnnual report 2023
STRATEGIC REPORTSTRATEGIC REPORTSTRATEGIC REPORT
At a glance
1. Personal has been renamed ii and includes Personal Wealth unless otherwise stated.
Specialist asset management
Investments
Our capabilities in our Investments
business are built on the strength of
our insight – generated from wide-
ranging research, worldwide
investment expertise and local
market knowledge.
Our clients:
–
Insurance companies
–
Sovereign wealth funds
–
Independent wealth managers
–
Pension funds
–
Platforms
–
Banks
–
Family offices
Adjusted operating profit
£50m
AUM
£366.7bn
Cost/income ratio
94%
UK savings and wealth platforms
Adviser
Our Adviser business, the UK’s second
largest advised platform by AUA,
provides financial planning solutions
and technology for UK financial
advisers which enables them to
create value for their businesses and
their clients.
Our clients:
–
Financial advisers
–
Discretionary fund mana
g
ers
Adjusted operating profit
£118m
AUMA
£73.5bn
Cost/income ratio
47%
interactive investor (ii)
1
Powered by the UK’s second-largest
direct-to-consumer investment
platform, our interactive investor
business enables individuals in the UK
to plan, save and invest in the way
that works for them.
Our clients:
–
Individuals
Adjusted operating profit
£114m
AUMA
£66.0bn
Cost/income ratio
60%
Read more about our three businesses on pages 20 to 37. Overall performance
summary is included on page 70.
2 abrdn.com Annual report 2023
Our purpose
To enable our clients to be better investors
What sets us apart
A diversified business supporting clients at all financial stages
Shaped by our cultural commitments
We
p
ut the client first We are em
p
owered We are ambitious We are trans
p
arent
Industry-
leading platforms
enabling
enhanced client
service and value
Embedding
AI and
technology in
the business
Diversified, multi-
client segment
business model
creating a
resilient
organisation
Positive and
decisive action to
strengthen the
business model
Trusted brands
with strong
market positions
Strong
commitment to
sustainability and
climate action
Operating in
markets with
structural growth
characteristics
Strong balance
sheet and
shareholder
returns
Read more about our culture on pages 48 and 49.
3abrdn.comAnnual report 2023
STRATEGIC REPORT
December
2020
February
2021
March
2021
July
2021
September
2021
October
2021
December
2021
January
2022
December
2022
Acquisition of
majority interest in
Tritax, bringing
exposure and
expertise in the
fast-growing
logistics and
e-commerce
real estate
market.
Completed
April 2021.
Sale of Parmenion
Capital Partners
demonstrating
our commitment
to simplify our
operations and
reconfigure our
business for
growth.
Completed
June 2021.
Sale of Bonaccord
Capital Partners
and Hark Capital,
simplifying our
business in the
US.
Acquisition of
interactive
investor, the
UK’s leading
subscription
based D2C
investment
platform,
significantly
expanding our
Personal business.
Completed May
2022.
Purchase of
Macquarie
Delaware Funds,
adding
significant scale
to three of our
existing US
closed-end
funds.
Completed July
2023.
Reset our
relationship with
Phoenix Group
with a simplified
and extended
strategic
partnership to
manage their
assets until at
least 2031, and
sold them the
Standard Life
brand.
Standard Life
Aberdeen
officially becomes
abrdn plc, building
on our heritage
with a highly
differentiated
brand creating
unity across the
business.
Acquisition of
Finimize, with
the intention
to enable it to
become the
number one
information
platform for
modern
investors.
Monetised a 4%
holding in Phoenix,
raising £0.3bn with
the intention to
return this capital
to shareholders.
Our strategy in action
Our strategy
in action
At the start of 2021, we set out our three-year strategy to build a
diversified business that could be successful through market-cycles. We
have refocused on areas of strength, selling non-core elements with
lower growth and profitability, and making strategic and bolt-on
acquisitions to add high value capabilities.
abrdn has fundamentally transformed. We now have a differentiated
value proposition, providing full lifecycle service through our investment
content and wealth platforms.
4 abrdn.com Annual report 2023
December
2022
February
2023
February
2023
February
2023
May/
June
2023
June
2023
July/
October
2023
October
2023
December
2023
Completed
£300m share
buyback.
Commenced in
July 2022.
Delivery of Phase
2 of Adviser
Experience
Programme, one
of the largest and
most complex
changes since
we launched the
platform, making
it faster and more
flexible. Further
phases will
complete in 2024
and 2025.
Sale of remaining
shares in HDFC Life
and HDFC Asset
Management.
Since December
2020, total net
proceeds of
£2.1bn has been
generated
through these
stake sales.
Sale of US private equity
business followed by sale of
European headquartered
private equity business,
underlining our
commitment to exit
non-core businesses that
no longer align to our
overall product strategy.
US sale completed
October 2023. European
sale expected to
complete in the first half
of 2024.
Completed
£300m share
buyback.
Commenced
£150m share
buyback in June
2023, and
extended to
£300m in August
2023.
Sale of discretionary
fund management
business, concluding
that another owner
would be better
placed to invest to
deliver scale
in the business.
Completed
September 2023.
Managed Portfolio
Service team
moves to Adviser
from Personal,
unlocking greater
opportunity for
growth.
Acquisition of the
healthcare fund
management
capabilities of
Tekla, including
four NYSE listed
healthcare and
biotech thematic
closed-end funds.
Completed
October 2023.
Proposed acquisition
of four closed-end
funds from First
Trust, cementing
our position as the
third-largest
manager of
closed-end
funds globally.
Expected to
complete H1 2024.
5abrdn.comAnnual report 2023
STRATEGIC REPORT
Chairman’s statement
Adapting to
succeed in
an evolving
sector
Context is important when reviewing progress made
during 2023.
Last year, many of the headwinds facing active asset
managers grew stronger, accelerating our drive to
reshape abrdn to be more resilient within and across
economic cycles. Notably, the year saw continuation,
right across the market, of asset allocations trending
away from investment in equities, from emerging
markets and from commercial real estate, all reflecting
both changes in risk appetite as well as the re-
emergence of competing cash and liquidity products
with attractive yields, as interest rates rose markedly to
combat stubbornly high inflation.
This latter point was particularly relevant as, both in the
UK and in the US, investors could capture risk-free
returns in excess of 5% for the first time in 15 years at a
time of heightened economic uncertainty. Continuing
outflows from UK equity funds marked 43 consecutive
months of outflow, in part due to the change in risk
preference described above. Equally important was the
continuing run-off of closed defined benefit UK pension
schemes’ investment in UK listed equities, as they
completed their transition to liability driven strategies or
transferred their obligations to the insurance market.
Investment through defined contribution retirement
schemes compensated only partially, as contribution
rates are significantly lower than those of defined
benefit pension schemes and equity allocations there
are primarily to global equity products in which UK listed
companies are a very small component. Recently
released ONS figures illustrate the impact of these
structural shifts in asset allocation, evidencing that UK
pension schemes and insurers combined held only 4% of
UK listed equities, declining from around half in the early
1990s.
This structural shift in the relative importance of the UK
institutional market underlines the significance of our
recent diversification to get closer to the end investor
through investment in our Adviser and ii businesses. As
will be noted in our results for 2023, in a weak year for
our Investments business, in part due to continued
restructuring, our two platform businesses grew their
contribution to adjusted operating profit to £232m,
thereby contributing 93% of the Group total.
6 abrdn.com Annual report 2023
Macroeconomic and geopolitical backdrop
Investment activity in 2023 also faced challenges from
the macroeconomic and geopolitical environments. The
horrendous attack against Israel on October 7th
precipitated a powerful military response which is still
ongoing, with fears of a wider Middle East conflict
impacting investor sentiment. This added to concerns
over the continuing war in Ukraine. Economically, cost of
living burdens in the UK from continuing inflation
constrained the flow of funds into retail savings products
and indeed we saw some withdrawal from savings pots
as household budgets were stretched. With major
elections in 2024, notably in the US and the UK, but
extending into some 50 countries, the resulting politically
charged policy narratives added to investment
uncertainty. Helpfully, market levels improved in the final
quarter of 2023 as feared recessions seemed less likely
and inflationary threats were downgraded leading to
markets discounting earlier and larger interest rate
reductions than previously expected.
UK Capital Market restructuring initiatives and
demographic saving challenges
The decline in UK institutional participation in UK listed
equity markets referred to above, together with a
decline in new listings in London and UK listed company
departures to other listing venues deemed more
attractive, precipitated considerable attention from
within the financial industry, the media and government.
This led to a number of initiatives supported by
government, industry and the regulatory community to
remove barriers deemed to contribute to a lack of
competitiveness, as well as introducing reforms
designed to modernise UK capital markets. Of particular
note were the so-called Edinburgh Reforms, the
Mansion House Reforms as well as the work of the
Capital Markets Industry Taskforce and the FCA’s
proposed listing regime reforms.
As a leading investment business in the UK, we
supported these initiatives and believe adoption of the
measures contained within them are hugely important
to the delivery of a stronger UK economy and a more
competitive financial sector environment, through
which UK listed businesses can attract both the funding
and talent to be more successful. In 2023 we co-
sponsored a report by the think-tank New Financial that
provided an analysis of many of the key issues
underlying this agenda and we look forward to playing
our part in supporting adoption.
The Mansion House Reforms were also particularly
important in highlighting the relatively lower returns in
pooled retirement savings in the UK in defined
contribution schemes, as a consequence of both the
large number of small schemes and a lower risk
appetite within such schemes than seen in other leading
economies. The savings gap opening up from this low
risk tolerance, together with the lower mandatory
contribution rates in the UK, risk contributing to a
demographic timebomb as current generations of
scheme participants are likely to reach retirement with
inadequate funds to meet their expectations of a
comfortable retirement. Our industry along with our
regulators and policymakers need to work together to
ensure people are properly informed of the
responsibility increasingly placed on the individual to
build adequate funds to support retirement. This is a
theme where abrdn plans to have a leading voice and
we are positioning our Adviser and ii businesses to play a
prominent role; Stephen highlights the steps we are
taking in his review.
Progress on delivering on our strategic ambitions
and performance in the year
With revenue growth in 2023 expected to be very
challenging given the economic and geopolitical
backdrop described above, we set one of our priorities
for 2023 to eliminate some £75m of costs, excluding that
derived from business disposals. In part, this was
achieved through consolidating or closing sub-scale
funds and sharpening the focus of the investment
strategies offered to clients. All of this was achieved and
is discussed more fully in the Chief Executive Officer’s
review.
However, the scale of revenue reduction in 2023 as a
consequence of market levels, risk reduction by clients
to less remunerated strategies and net outflows in the
Investments business far exceeded the cost savings
achieved, leading to the continuation of an
unsatisfactory ratio of cost to revenues in the
Investments business. Performance in our other two
businesses was good and in line with our expectations
but that good performance was overshadowed by the
unsatisfactory profitability within Investments. As a
consequence, the Board spent the majority of its
meetings in 2023 analysing in detail the shape of the
Investments business against market trends and
determining what actions were necessary and within
our control to rebuild the profitability of the business on a
sustainable basis.
This culminated in the announcement made on
24 January that a more significant reorganisation
and simplification of the business than previously
contemplated was needed to address the ongoing
pressure on revenues from changing patterns of asset
allocation, in particular the greater institutional adoption
of passive and low cost thematic strategies. As
announced, the actions planned throughout 2024 and
2025 are designed to take at least £150m from the cost
base within the Investments business and from
functional costs. Stephen discusses the necessary
actions in more detail in his review.
To build a sustainable business and to grow we need to
invest at the same time and this requires reallocation of
capital resources within abrdn.
During 2023 we completed the disposal of our non-core
stakes in HDFC Life and HDFC Asset Management,
which augmented our capital position by £576m. The
sale of abrdn Capital which was announced alongside
our 2022 results completed in September 2023 at the
agreed price of £140m adding a further £124m to our
capital position. We also completed the sale of our US
private equity and venture capital business in October
and in the same month announced the sale of our
European-headquartered private equity business to
Nasdaq-listed Patria Investments. This reshaping of our
footprint and capabilities allowed us to focus on
7abrdn.comAnnual report 2023
STRATEGIC REPORT
Chairman’s statement continued
business areas where we have better growth prospects
and comparative advantage and by reducing
complexity, we are reducing costs.
As promised, we reinvested a portion of the capital
released through the above disposals to fill out gaps in
our Investments business and add technology
capabilities and marketing resources in our Adviser and
ii businesses. In October, we completed the acquisition
of the healthcare fund management capabilities of
Tekla Capital Management bringing into the Group
$2.8bn of funds under management and more
importantly, adding a distinctive capability in listed
healthcare and biotech thematic closed-end funds.
Together with other recent closed-end fund acquisitions
this positions abrdn as the third largest manager of
closed-end funds globally. Investment in our Adviser and
ii business during 2023 to build organic growth
opportunities are covered in Stephen’s review.
When we reported our results for 2022 we indicated
that our intention was to make a similar return of capital
in 2023 as had been delivered in 2022, dependent on
successful non-core stake realisation and retaining
necessary funds for investment; this we have delivered
through a further buyback of c£300m of shares and
the maintenance of the interim dividend at 7.3p per
share. The Board is recommending to shareholders a
final dividend of 7.3p per share subject to their
approval at the upcoming AGM to bring the total
return to shareholders in respect of 2023 to £567m
(2022: £595m).
We are updating one of our key performance indicators
moving forward, from adjusted capital generation to net
capital generation. This metric more closely aligns with
the dividend paying capability of the Company over the
long term.
Board
As previously announced, both Stephanie Bruce, our
CFO and Brian McBride, a non-executive director did
not seek re-election at the 2023 Annual General
Meeting at which their significant contributions to the
development of abrdn were recognised. We wish them
both well in the next stages of their careers.
In October last year, we welcomed Jason Windsor as
our new CFO. Jason joined from Persimmon plc having
spent the vast majority of his career hitherto in financial
services. His financial industry experience and expertise
were gained notably through 12 years at Aviva, latterly
as Group Chief Financial Officer. Prior to that, he spent
15 years at Morgan Stanley in both London and
Singapore, rising to be a Managing Director within its
Investment Banking Division. Jason has made an
excellent start at abrdn, and we all are looking forward
to working with him more closely in delivering our
strategy.
Catherine Bradley has advised that she will not seek re-
election at the Company’s Annual General Meeting on
24 April 2024 and will stand down from that date as a
Non-Executive Director and as Chair of the Audit
Committee. On behalf of the Board and all my
colleagues, I would like to thank Catherine for her
significant contribution to abrdn and our Board and
Committee discussions. Earlier this year Catherine took
on the chair of ii, our direct-to-consumer investments
business, and she has concluded she should dedicate
her available time commitment to this responsibility. I’m
delighted she will remain connected with abrdn through
her ii appointment where we will continue to benefit
from her breadth of consumer, financial and regulatory
experience as we continue to grow ii and the critical role
it plays within the Group.
Outlook
Given all current uncertainties, it is hard to form a clear
outlook for 2024 and beyond. Our base case assumes
no major escalation in global inflationary pressures
across the major global economies or an escalation of
geopolitical tensions and assumes policy interest rates in
the US and the UK have peaked. We assume that,
notwithstanding some harsh rhetoric inevitable in an
election year, the US-China mutually beneficial trade
relationship will remain intact. With the US appearing to
be successful in engineering a soft landing after an
aggressive succession of interest rate hikes, upside to
the global economy rests upon the US maintaining its
solid growth trajectory and China resuming its
contribution as a key driver of global growth and as a
major part of the supply chain in the transition to a lower
carbon future. Given other geopolitical tensions, the US-
China relationship remains a top issue in the investment
world. Their shared global economic leadership has led
to an understanding of mutual dependency and
notwithstanding tension over high-end semiconductors
and critical minerals, the resumption of trade dialogues
and senior visits are encouraging for the global
economy. Outlook for the UK and the rest of Europe is
more muted, with it recently being confirmed that the
UK had entered a modest recession; the investment
picture is likely to remain cautious given electoral
uncertainty and the lagging impact of wage increases
and tax changes on consumer confidence.
We enter 2024 with a clear plan of what we need to do
to build a sustainable business with good growth
prospects and an efficient cost structure; our industry is
evolving rapidly as technology enables the offer of ever
more sophisticated tailored investment themes and
solutions at low cost. Proximity to the end consumer and
an understanding of their investment preferences and
the route through which they choose to invest will be
critical. abrdn is well positioned for this evolution in terms
of the mix of our businesses and the talent and financial
resources needed to succeed.
Sir Douglas Flint
Chair
8 abrdn.com Annual report 2023
Chief Executive Officer’s review
Building a
modern
investment
company
We have continued with our determination to build a
modern investment company that is capable of thriving
in a changing marketplace. In January of 2024, we took
the next step in that process, announcing a £150m cost
transformation programme to accelerate the delivery
of a more sustainable cost base that can support
appropriate long-term profitability. The need to
continue applying downward pressure on costs was
underlined by another challenging year. Throughout
2023, the ‘higher for longer’ rate environment across
developed economies put sustained pressure on most
asset classes, and while the market now expects a
reversal over 2024, there is no doubt that we have felt
the effects in our Investments business. The upside is the
impact higher rates have had on income in Adviser and
ii, underscoring the benefits of our diversified business
model, which delivers through the economic cycle.
When we embarked on our transformation journey
back in 2021, not many would have foreseen the level of
global economic and geopolitical turmoil we have since
experienced. That has inevitably hindered our progress,
and directly impacted performance. Nonetheless, as
pages 4 and 5 demonstrate, we have moved at pace to
evolve the business and create a model that is better
suited to the modern investment landscape, better
aligned to the products and services clients will want in
the coming years and better positioned for future
growth.
A platform for growth
As we look ahead, we now have a platform to build on,
connecting our investment content capabilities on the
one hand, with our market leading wealth platforms on
the other. We are able to identify where demand is
going and react more quickly than ever, using data
sharing between businesses to design better products
and creating tailor-made solutions in Investments that
meet the needs of clients and customers in Adviser, ii,
and the wider market.
Sensitivity to rates and markets has been mitigated by
our more diverse business model. We are also well
positioned to take advantage across the group when
rates do start to come down, with a move to risk-on
giving oxygen to Investments, an easing of the cost-of-
living pressures that have impacted Adviser, and a
return of investor confidence supporting an increase in
subscriptions and trading volumes for ii.
9abrdn.comAnnual report 2023
STRATEGIC REPORT
Chief Executive Officer’s review continued
Our new transformation programme will deliver an
annualised cost reduction of at least £150m by the end
of 2025. Approximately 80% of the cost reduction
benefits will be in our core Investments business. The
programme is targeting the removal of management
layers, increasing spans of control, and reducing
overheads. We will implement this programme with
minimal impact to client service and at all times focusing
on investment performance.
2023 performance
At £249m (2022: £263m), adjusted operating profit is
down 5% on the previous year. While Adviser and ii both
increased profitability, this was more than offset by
falling revenue in Investments where market conditions
had a substantial impact, as seen across the sector.
Overall, we are reporting an IFRS profit for the year of
£12m (2022 restated: loss £546m), this improvement
reflects a reduction in impairment of intangible assets
and restructuring costs.
Our determination to manage our cost base is evident in
a 4% reduction in adjusted operating expenses, even
including a full 12 months of ii (compared to 7 months in
2022). We exceeded our target to remove £75m in cost
from the Investments business, delivering savings of
£102m in the year, and we have since set out plans for a
new transformation programme that will deliver a
material improvement to our cost/income ratio.
As detailed below, we have maintained our disciplined
approach to capital allocation in 2023. Jason outlines
our performance in detail in the Chief Financial Officer’s
overview.
A leaner and more relevant Investments business
After another year of substantial change, we finished
2023 with a leaner, more relevant Investments business.
With the sale of our US Private Equity franchise and
agreement to sell our European Private Equity franchise,
and having continued to deliver on our fund
rationalisation programme with the closure of a further
c60 funds in 2023, our more focused offering is based
upon areas of real strength and scale across public
markets and alternatives.
This simplification enabled us to go beyond our £75m
cost reduction target.
Investment performance over the three and five-year
time periods has weakened, with 42% (2022: 65%) and
52% (2022: 58%) of AUM covered by this metric ahead
of benchmark respectively. The drop in the three-year
performance reflects a challenging period for active
managers, particularly those with a quality equity
investment style with a bias towards Asia and Emerging
Markets. Our new Chief Investment Officer, Peter
Branner, who joined us in 2023, is leading a wide-ranging
programme of work to review and strengthen our
investment processes. You can read more about this
work in the Investments section on page 22.
The creation of a more focused Investments business
has been accompanied through the careful
deployment of capital in select areas where we see
good growth opportunities. Our acquisition of the fund
management capabilities of Boston-based Tekla
Capital Management has added specialist knowledge in
the healthcare and biotech sector, an area we have
identified as one of a small number of megatrends that
are expected to offer exciting investing opportunities in
the future. Alongside Tekla, the acquisition of other
closed-end funds from Macquarie and the proposed
acquisition of funds from First Trust, would collectively
add £3.6bn in AUM and strengthen abrdn’s position as
one of the world’s leading players in closed-end funds.
Leading positions in the structurally attractive UK
savings and wealth market
With an ageing population and the ongoing shift toward
individuals having to take a greater amount of
responsibility for their own financial futures, the long-
term structural growth factors underpinning the UK
savings and wealth market are well known. In that
context, owning two of the leading platform businesses
in the sector puts abrdn in a strong position, and the
work we have done this year to strengthen those
businesses for the future only adds to that potential.
While the continuation of difficult market conditions
through 2023 undoubtedly had some impact across
both our Adviser and ii businesses, this was mitigated by
increased treasury income that supported improved
adjusted operating profit in both Adviser and ii. We note
that the FCA has been considering the retention of
interest earned on cash balances and we have been
working with them to ensure they understand our
approach. We are confident that both Adviser and ii
offer clients and customers fair and transparent fee
structures.
In Adviser, 2023 saw the largest and most advanced
platform technology upgrade that we have undertaken.
As expected, this caused some disruption to service, but
by year-end service levels were returning to normal,
and we can now offer, and build upon, a far superior
user experience for our clients. As announced back in
May 2023, this will also see us roll out adviserOS this year
– a new way of delivering platform services to clients
that will enhance our proposition, extend client capacity,
and differentiate abrdn from the wider market.
The year saw our Managed Portfolio Services (MPS)
team shift to Adviser from our ii business. We anticipate
strong demand from advisers and believe there is a
significant opportunity for further growth here. The
same applies to the launch of our own on-platform SIPP
and Junior SIPP in 2024.
ii also benefited from a significant technology update in
2023 that allowed the platform to remain ahead in what
is a rapidly developing sector. While market conditions
dampened customer acquisition and trading activity,
we enjoyed the comparative resilience afforded by our
subscription model and proved our strength by
increasing our share of market trades over the year. ii
also delivered the highest net AUA inflows across UK
D2C platforms in 2023, according to Direct Matters.
Important work to optimise the business model within ii
was also delivered. The sale of our discretionary fund
management business to LGT in September underlined
our disciplined approach to capital allocation. The
simplification and integration of our Financial Planning
10 abrdn.com Annual report 2023
and ii teams showed that we can cut cost while creating
a model we can better leverage for our customers.
Another customer-led development was the launch of
our Investor Essentials and Pension Essentials products,
offering lower prices to customers with smaller
investment pots and widening out the breadth of the
market for whom ii becomes the best choice on price.
We expect these innovations, and investment in our
brand, will support higher customer acquisition over
time, especially as conditions begin to support improved
investor confidence.
Disciplined capital management
The indicative CET1 resources at 31 December 2023
were £1.5bn (2022: £1.3bn) with a coverage of 139%
(2022: 123%). This was facilitated by another year of
disciplined capital management, during which we
carefully balanced non-core divestments with a
combination of targeted investment in the business and
continued returns to shareholders.
Organic cash generation and efficient stake sales
generated £875m. Consistent with the previous year, we
returned c£600m to shareholders in the form of
dividends and share buybacks, and reinvested £152m
largely to continue growing our closed-end fund
business.
We plan to deploy surplus capital to fund the delivery of
the £150m cost savings we have outlined and may use
the proceeds from divestments to support bolt-on
acquisitions within key thematic markets. The Board’s
current intention is to pay a total annual dividend of
14.6p until it is covered at least 1.5 times by adjusted
capital generation, at which point the Board will seek to
grow the dividend in line with its assessment of the
underlying medium-term growth in profitability.
Playing our part in creating a more sustainable
world
The unfortunate sequence of global crises we have
experienced in recent years may have drawn some
attention away from the challenges we face on climate
change but the urgency around the need to respond is
only intensifying. Our Sustainable Investing team were
present for the COP28 meeting in the UAE in November
where we were encouraged by agreement for the first
time on a transition away from fossil fuels, which we
believe can be a catalyst for meaningful action. We
continue to contribute from two angles; careful
management of our own operations to limit our climate
impact, where we are exceeding our objective of a 50%
reduction in reported operational emissions by 2025
with currently a 69% reduction versus our 2018 base
year; and a deeply embedded approach to sustainable
investing that we have cultivated over many years with
an ongoing reduction being reported for 2023 in the
carbon intensity of in-scope public market and real
estate assets, meaning we are also on track to meet our
targets in this area (see page 45 for more detail).
Another key aspect of our sustainability agenda is our
commitment to offering an inclusive and supportive
working environment.
We have specific approaches in place to address
gender, ethnicity and social mobility imbalances and
recorded another successive year of reducing our
gender pay gap. You can read about our efforts in more
detail on page 53.
At a headline level, we saw overall employee
engagement remain at similar levels to last year, despite
a backdrop of challenging market conditions and
ongoing change within the business. The external
environment, coupled with the scale of change as we
transform our business, have undoubtedly been
challenging for our colleagues. Across the company
they have shown deep commitment to our clients and a
huge will to rebuild the firm’s success. On behalf of the
Board and the management team, I’d like to thank
everyone across the business for their hard work, skill
and determination.
The next phase of our progress
Over the last three years we have moved at pace to
reshape the company and create a business model that
is fit for the future. We now have more ways to win,
particularly through our enhanced exposure to the
highly attractive UK savings and wealth market, but also
with a more focused and more efficient Investments
business. This means we are already far better
equipped to address the well-known challenges facing
active asset management. However, we have also
recognised the need to go further still in transforming
our Investments business. The transformation
programme set out in January will deliver a leaner, more
profitable Investments business to go alongside our two
leading platform businesses. We are clear that there is
more work to do but we are confident in the trajectory
that we have created and the progress that we are
making. Our goal is for all three businesses to make their
appropriate contribution to Group earnings and in doing
so, create a sustainably profitable abrdn.
Stephen Bird
Chief Executive Officer
11abrdn.comAnnual report 2023
STRATEGIC REPORT
Our business model
Building a modern
investment company
Positioned for success through
the economic cycle
Driven by our purpose to enable our clients to
be better investors, we have strengthened our
business model through effective capital
management and investment to create strong
foundations for growth.
Our strengths and resources
Specialist asset manager
providing investment solutions to
meet complex needs.
Sustainable investment
considerations integral to our
investment process.
Strong UK adviser platform
offering, powered by leading
technology.
UK’s second largest direct-to-
consumer investment platform.
Strong balance sheet to drive
shareholder value.
Delivered through strong
operational processes
Controlled processes
Our control environment helps us
manage risk effectively, provide
business security and maintain
operational resilience.
Efficient operations
We are building our operating
model for agility, speed and
efficiency, supported by
technology which aims to deliver
the best possible experience.
An efficient, diversified
model
Strengthened, simplified business
– Strategic focus
– Robust governance
– Effective capital mana
g
ement
Driving investment in long-term
growth
– People
– Product
– Technolo
g
y
Structured around three
complementary businesses
Investments
Adviser
ii
Positioned to benefit from
key investment market
opportunities
Continued growth opportunities in
Asia and emerging markets, driven
by:
– Demographics
– Urbanisation
– Economic opportunity
– Wealth effect
Energy transition seen across
every industry including:
– Homes
– Transportation
– Construction
Democratisation of technology
and investment
– People empowered to shape
their own investment
decisions
1
2
3
12 abrdn.com Annual report 2023
Long-term value created
Diversified business and a strong
balance sheet support long-
term value creation
Investment in long-term growth
Payment of dividends and the
return of excess cash to
shareholders
Value shared with stakeholders
Clients
We focus on delivering outcomes that truly
matter to our clients. We draw on our expertise
and insight with the aim of delivering long-term
investment performance.
42%
Three-year investment performance
People
We aim to attract and develop the best people
for leadership roles, and to offer clear pathways
for career advancement.
54%
Employee engagement score
Society
We have important responsibilities to society
and the environment. We combine the power
of responsible investment with the positive
impact we can have through our operations.
No.1
Ranked asset manager by
World Benchmarking Alliance
Shareholders
We aim to create sustainable shareholder value
over the long term. We have a strong track
record of returning value to shareholders.
14.6p
Full year dividend
How we make money
We earn money mainly from asset
management and platform fees based
on AUMA. We also earn revenue from
subscription and trading fees, and earn
an interest margin on cash balances.
Read more in the Chief Financial Officer’s overview
on pages 62 to 75
Read more on Stakeholder engagement
on pages 54 to 56
13abrdn.comAnnual report 2023
STRATEGIC REPORT
Our strategy
A strategy for
client-led growth
A strong sustainable business means focusing on the areas where we
have the scale and expertise to win. We have four clear strategic
priorities where existing and emerging market opportunities, and the
evolving needs of our clients, align to our areas of strength.
Asia
Asia is an economic powerhouse – and there’s more to
come. Long-term economic growth requires three
things: an increasingly skilled workforce, investment in
infrastructure, equipment and technology, and
improving productivity. Asia’s emerging markets
demonstrate all three of these essential building blocks.
We remain deeply committed to growing our business
in Asia. Our track record in specialist equities, means we
are well placed to serve both clients in and outside of
Asia looking to invest in the region.
Progress
– In 2021, we launched the abrdn Sustainability
Institute in Singapore and hired René Buehlmann as
CEO Asia Pacific, and then CEO of the Investments
business in May 2023.
– In 2022, we celebrated 30 years of investing in Asia.
– We refocused our model in Asia Pacific exiting
Taiwan and Australia and introducing distribution
partnership models.
– In 2023, we launched Strength in Asia, a major brand
campaign in markets across APAC and Europe.
– We led the region on driving Sustainable investing
through the facilitation of Asia Sustainability Week.
Sustainable
investing
While scrutiny of Environment, Social and Governance
(ESG) approaches has intensified, clients still want to
invest in a way that has the potential to make a
difference as well as providing a financial return –
whether that be through powering the energy
transition, protecting biodiversity or driving positive
social change.
We have created a suite of sustainability-focused
solutions to meet client needs. We firmly believe that
active engaged investment management is integral to
providing the capital for positive change.
Progress
– In 2021, we launched our climate change fund
range. We also created a new Chief Sustainability
Officer position to ensure responsibility for this
integral theme was represented at the most senior
levels.
– In 2022, we launched our MyFolio Sustainable Index
range in support of clients’ ESG goals and our
Emerging Markets Sustainable Development
Corporate Bond passed through the $100m mark in
its first year.
– Over the course of the last two years, we have been
running an engagement programme with the
highest-financed emitters in our equity holdings,
identifying clear milestones on the path to
decarbonisation.
14 abrdn.com Annual report 2023
Alternatives
We believe we are in the foothills of the next tech
super-cycle which will see revolutions in biotech and
healthcare, clean tech, and digital assets. The best way
to access investment in these areas will be Alternatives.
Our Alternatives business includes our capabilities in
real assets, which comprises extensive global real
estate expertise, infrastructure and commodities. It also
offers clients access to major areas of European
Private Credit, as well as compelling and innovative
opportunities in the Hedge Fund sector.
Progress
– We have built out our Alternatives franchise to
significant scale with £76bn of assets, particularly in
real estate and logistics. Tritax, which we acquired in
2021 remains a leading player with two of the
biggest listed logistics funds in the market.
– In 2023, we were appointed by Border to Coast
Pensions Partnership, one of the UK’s largest asset
owner pools, to support the launch and
management of its UK Real Estate proposition.
– We have enhanced our talent and structure,
appointing new Heads of Private Credit and Real
Estate.
– We refocused the business through announcing the
sale of non-core US and European Private Equity
businesses.
UK savings
and wealth
The decline of defined benefit pensions, the significant
advice gap and an ageing society mean it is more
important than ever that UK investors have the tools
and appropriate guidance or advice.
With ii offering market-leading direct investing and our
platform providing a best-in-class proposition to the
adviser market, we have successfully repositioned our
business towards an increasingly attractive and
growing UK savings and wealth market.
Progress
– Acquisition of interactive investor brought 400,000
new customers to the abrdn group.
– Since the acquisition, ii has launched new products
and price points, including Investor Essentials and
Pensions Essentials, subscriptions at a lower price
point designed to appeal to investors with less to
invest. This makes ii the cheapest on the market for
anyone with £15,000 or more to invest.
– In 2023, we migrated 5,800 customers from
Investments to ii to better service their needs.
– In Adviser we have retained our ‘A’ rating for
financial strength from leading independent
consultancy firm AKG – with financial strength a key
consideration for advisers when selecting their
primary platform.
– In 2023, we delivered a major technology upgrade
to the platform to better service our adviser clients.
15abrdn.comAnnual report 2023
STRATEGIC REPORT
Our strategy continued
Our investments in action
As a specialist global investor with over £360bn of AUM, we
help capital meet opportunity to support the world’s ever-
changing needs. Informing our approach are a number of
megatrends that are set to influence the shaping of the
global economy, including decarbonisation, urbanisation and
infrastructure development and a shift in economic power
to the East.
London based private biopharmaceutical company
Quell Therapeutics are working to deliver
transformational and valued therapies addressing a
range of autoimmune and inflammatory diseases, as
well as preventing rejection in organ transplantation.
We are invested through two of the four closed-end
funds acquired from Boston based Tekla in 2023 to
build out our capabilities in the biotech and healthcare
sphere where technology advances and demographic
changes are set to drive growing opportunities in the
future.
Ten Boomgaard in Bruges is the first investment in
Belgium on behalf of investors in the abrdn Pan-
European Residential Property Fund (APER) which now
has assets in 30 cities across 10 countries. As demand
continues to rise for good quality housing in key
European cities, the fund successfully raised over
€100m in the last quarter of 2023.
16 abrdn.com Annual report 2023
The Mirasierra Gallery in Madrid has been recognised as
the Best Retail Park in Spain by leading industry body
Asociación Española de Centros y Parques Comerciales
(AECC). Purchased for an institutional mandate, the
Gallery brings together both retail and healthcare
centres and was constructed with a core commitment
to sustainable building management.
Power Grid Corporation of India is the country’s largest
electric power transmission utility, transmitting about
50% of the electricity used domestically. Invested in the
company through abrdn’s Asia Income fund, we see an
opportunity to benefit from infrastructure spending and
the massive push towards renewables and associated
infrastructure in India.
Wessex Internet Limited and its majority shareholder,
abrdn’s third Infrastructure Fund, ASCI III, announced
successfully securing an additional £35m funding in 2023
for the business’s long term growth plans, bolstering the
firm’s mission to provide high-speed fibre to the home,
and improved connectivity in rural areas of South-West
England.
17abrdn.comAnnual report 2023
STRATEGIC REPORT
Performance overview
1. Relates to ii (excluding Personal Wealth).
2. Comparatives have been restated for the HASL implementation of IFRS 17. Refer to Basis of preparation in the Group financial statements section.
Results impacted by continued
challenging market conditions
Market conditions remain
challenging and this is reflected
in our 2023 results.
We are taking actions to restore
our core Investments business
to a more acceptable level of
profitability.
Financial performance
summary
£1,398m
Net operating revenue
reduced by 4% to £1,398m (2022: £1,456m) with lower
revenue in Investments mainly reflecting the impact of net
outflows and adverse market conditions. This was partly
offset by growth in Adviser and ii.
£249m
Adjusted operating profit
reduced by 5% to £249m (2022: £263m) reflecting the
lower profitability in the Investments business, partly
offset by the benefit of the full 12 months contribution
from ii
1
of £127m. Excluding ii
1
, adjusted operating profit
was 38% lower than 2022 at £122m (2022: £196m).
82%
Cost/income ratio
was stable at 82% (2022: 82%) reflecting the benefit from
the efficient Adviser and ii cost models, offset by lower
revenue in Investments.
(£6m)
IFRS loss before tax
of £6m (2022: loss £612m
2
) was impacted by losses of
£178m from the change in fair value of significant listed
investments, restructuring and corporate transaction
expenses of £152m and goodwill impairments of £62m.
(£13.9bn)
Net outflows (excl. liquidity and LBG
tranche withdrawals)
of £13.9bn (2022: £10.3bn), representing (3%) of opening
AUMA, largely reflected by lower gross inflows which
included the impact of the uncertain market environment.
18 abrdn.com Annual report 2023
Capital performance
summary
£1,466m
CET1 capital resources
increased to £1,466m (2022: £1,301m), benefiting by
£576m from the remaining HDFC stake sales, partly offset
by the impact of the £300m share buyback in 2023.
£1.8bn
Cash and liquid resources
remained robust at £1.8bn (2022: £1.7bn). These
resources are high quality and mainly invested in cash,
money market instruments and short-term debt
securities.
£557m
Value of listed stakes
of £0.6bn (2022: £1.3bn) excluded from the CET1 capital
position. Reduction includes impact of final HDFC stake
sales which generated net proceeds of £0.5bn.
14.6p
Full year dividend per share
was maintained at 14.6p (2022: 14.6p). It remains the
Board’s current intention to pay a total annual dividend of
14.6p until it is covered at least 1.5 times by adjusted
capital generation.
Our capital resources provide
strength to allow investment
to grow the business and be
more efficient.
Read more about our financial and capital performance in the
Chief Financial Officer’s overview section of this report.
19abrdn.comAnnual report 2023
STRATEGIC REPORT
Our businesses – Investments
1. The investment performance calculation covers all funds that aim to outperform a benchmark, with certain assets excluded where this measure of
performance is not appropriate or expected. Further details about the calculation of investment performance are included in the Supplementary
information section.
A refocused Investments
business ready to capitalise
on areas of strength
The capabilities in our Investments business
are built on the strength of our insights, which
are generated from wide-ranging research,
worldwide investment expertise and local
market knowledge. While continuing to offer a
comprehensive range of solutions in public
markets and alternatives, we have simplified
our Investments business and refocused our
capabilities on areas where we have the scale
and specialism to capitalise on the key
themes shaping markets.
Highlights
£122.4bn
AUM from our fixed income capabilities
£23.7bn
AUM in our closed-end funds
£102m
Cost reduction in the Investments business,
exceeding the £75m target set for 2023
Investment performance
1
1 year
44%
(2022: 41%)
3 years
42%
(2022: 65%)
5 years
52%
(2022: 58%)
“Faced with industry headwinds and a challenging risk-off
environment for a second year in a row, 2023 was a difficult
year for the Investments business. However, we are taking
decisive action to stabilise flows, improve our cost/income
ratio and build the foundations for sustainable growth.
As a specialist asset manager, we continue to see compelling
opportunities across both public markets and alternatives, and
I remain confident that we can deliver value for our global
client base, particularly as markets normalise.”
René Buehlmann
CEO, Investments
Annual report 2023abrdn.com20
We are a specialist asset manager with £366.7bn in
AUM. We focus on areas where we have both the
strength and scale to capitalise on the key themes
shaping the market, through either public markets or
alternative asset classes.
R
i
s
k
a
w
a
r
e
Better outcomes
for clients
P
u
b
l
i
c
m
a
r
k
e
t
s
A
l
t
e
r
n
a
t
i
v
e
s
P
r
i
v
a
t
e
c
r
e
d
i
t
R
e
a
l
e
s
t
a
t
e
S
p
e
c
i
a
l
i
s
t
e
q
u
i
t
i
e
s
F
i
x
e
d
i
n
c
o
m
e
Q
u
a
n
t
i
t
a
t
i
v
e
M
u
l
t
i
-
a
s
s
e
t
E
S
G
e
m
b
e
d
d
e
d
l
o
g
i
s
t
i
c
s
s
o
l
u
t
i
o
n
s
A
l
t
e
r
n
a
t
i
v
e
i
n
v
e
s
t
m
e
n
t
I
n
f
r
a
s
t
r
u
c
t
u
r
e
a
n
d
21abrdn.comAnnual report 2023
STRATEGIC REPORT
Our businesses – Investments continued
Positioning our business
to capitalise on
megatrends
Another challenging year for investors
We have continued to operate in a challenging, risk-off
environment with outflows seen across the market. The
notable drop in market values across emerging markets
(EM), fixed income and real assets has presented a
significant revenue challenge. Geopolitical and credit risk
persist, while rising interest rates have continued to drive
asset allocation into lower-risk, lower-margin debt
products and cash. With the growing adoption of passive
and index investing also disrupting traditional asset
management models, our business continues to take
active steps to not only mitigate these challenges but also
to position itself for a pivot back to growth.
Investment performance over the three-year time period
has weakened, with 42% of AUM covered by this metric
ahead of benchmark (2022: 65%). The drop in the three-
year performance reflects a challenging period for active
managers particularly those with a quality equity
investment style with a bias towards Asia and Emerging
Markets. To address these challenges, we are committed
to refining our processes by:
– Expanding our thematic equity offering and research
capabilities.
– Implementing asset class-specific process
enhancements, including refinement to valuation
approaches, portfolio construction techniques, and risk
analytics.
– Evolving our CIO governance structure and
introducing ‘Team Scans’ at asset class and desk levels
to facilitate peer review and to drive continuous
improvements.
– Focusing on strategic technology and data initiatives to
enhance analysis and process efficiency.
Despite current headwinds, clear megatrends have
developed that will dictate market dynamics in years to
come. In 2023, we continued to align ourselves to these
trends:
Urbanisation and infrastructure development: With rapid
urbanisation, and growing populations worldwide, the
demand for homes and infrastructure continues to grow,
driving capital expenditure and economic activity. We
have significant scale in real assets with £42.8bn of AUM as
at December 2023. In the logistics space, abrdn-owned
Tritax remains a leading player with two of the largest
listed logistics funds in the market. Throughout 2023, we
demonstrated momentum across infrastructure, living
and logistics, notably winning a significant mandate with
Border to Coast in June to support the launch and
management of its UK real estate proposition.
Climate change and the energy transition: Global carbon
emissions rose by another 1.1% last year, which was the
hottest year on record. However, the global energy
transition is well underway, supported by the COP28
agreement to triple renewable capacity and double
energy efficiency by 2030. We continue to evolve our
product range to capture climate commitments aiming to
respond to continued market interest in sustainable and
climate investing. In June 2023, our Climate Transition
Bond Fund secured Environmental Finance’s ‘ESG Fixed
Income Fund of the Year’ award, after being recognised
for its particular focus on climate adaptation.
Health and biotech: In October 2023, abrdn completed the
acquisition of the healthcare fund management
capabilities of Tekla Capital Management, a specialist
healthcare investment adviser. With the global healthcare
sector grappling with an ageing population and increasing
rates of chronic illnesses, such as diabetes and cancer, the
healthcare technology industry has grown rapidly. In the
United States alone, healthcare expenditure has grown at
an annual rate of 6% since the 1980s, as the US population
has surpassed 330 million and the obesity epidemic has
worsened.
Growth in Asia and emerging markets: Despite the
significant headwinds over the last two years we expect
Asia and emerging markets to remain important drivers of
global growth. Our estimates suggest that by 2035,
emerging markets will drive c75% of global growth, with
China and developing Asia alone accounting for 60% of
this. With a significant specialism in EM and Asia, where we
have operated for over 30 years, we are well positioned to
benefit from these structural growth opportunities. Despite
signs of recovery in Q4, Asia and EM performance was
subdued in 2023. However, we expect both Asia and EM to
deliver improved performances this year and next with
opportunities emerging to further capitalise on our strong
insurance heritage across the regions.
22 abrdn.com Annual report 2023
Our progress in 2023
Strengthening our team
In May 2023, we announced changes to the management
team of our Investments business with René Buehlmann
becoming sole CEO, Peter Branner joining as Chief
Investment Officer and Xavier Meyer being promoted to
Head of UK and EMEA and Chief Client Officer.
Strategic focus
In July and October we announced the sales of our US and
European Private Equity businesses, respectively with the
US sale completing in October and the European sale
expected to complete in H1 2024. These disposals will
raise over £105m for the business and reflect our strategy
to focus on areas of strength and invest in sectors with
attractive long-term dynamics.
Delivering significant cost savings
In 2022, we merged or closed c60 funds to simplify our
offering and refocus on scale. In 2023, we continued this
process closing a further c60 funds deemed to be sub-
scale, inefficient or no longer aligned with our core
strengths. While closing funds is never a simple exercise,
we have significantly progressed our fund rationalisation
programme, which was central in the cost savings
delivered across 2023. This process has also increased
scale for our existing funds, with 74% of our funds now with
over £100m in AUM (61% in 2022) and 55% with over
£200m in AUM (41% in 2022).
Our most significant headwinds this year have been in
emerging markets, Asia and Global Absolute Return
Strategies (GARS) where we have continued to see
outflows. Our EM range is well positioned to pivot to growth
once investor appetite for risk returns, and our GEM
Income fund continues its stellar track record, in which it
has performed in the top quartile of the market since
inception. We have taken action following a strategic
review to merge or close funds associated with our GARS
range, which completed in December 2023.
In addition to our fund rationalisation strategy, we
simplified our management structure, restructured our
Australian operations, and refocused our equities and
multi-asset franchises. These actions, taken in
combination, resulted in the Investments business
comfortably exceeding its £75m cost saving target with
£102m in savings delivered in 2023.
1. A subset of the abrdn product range in-scope for rationalisation.
Focusing on areas of strength
Simplifying our product range, exiting undifferentiated or
sub-scale areas, and reducing costs has allowed us to
intensify our focus on our areas of expertise in higher-
margin products and high-growth sectors with the highest
potential to deliver performance:
Fixed income: Our fixed income offering has considerable
scale with over £122bn AUM across credit, government
bond and money market funds in developed and
emerging markets. Fixed income opportunities have been
subdued in recent years by the low-yield environment, but
in 2023 we began to see this trend reverse and our
pipeline is now promising. This potential is underpinned by
performance with 81% of our fixed income capabilities
outperforming over three years, and in credit, where we
have particular strength, 99% of our assets outperforming
over the same period.
Alternatives: Real estate, infrastructure and logistics all
continue to show attractive annual growth rates and
compelling opportunities for scale players. In 2023, we
made a series of investments across European real estate
and infrastructure, with our third infrastructure fund, ASCI
III, investing in Spanish fibre networks, biomethane facilities
in Italy and regional heating and electricity in Finland. At
the end of 2023, our Alternatives business had £76.4bn in
AUM including £42.8bn in real assets, £8.8bn in private
credit and £17.1bn in funds of hedge funds and
commodity ETFs.
Closed-end funds: In 2023, we announced three significant
acquisitions in the closed-end fund (CEF) space, acquiring
five CEFs from Macquarie Asset Management, the four
listed CEFs of Tekla Capital and entering into an
agreement to acquire four CEFs from First Trust, which we
expect to complete in Q1 this year. Assuming the
completion of the First Trust funds, these acquisitions,
when taken in combination, would add £3.6bn in AUM,
strengthening our already robust CEF offering. We remain
the third largest CEF manager globally.
Significant insurance expertise: We have nearly 200 years of
heritage in pensions and insurance, and currently run
£45bn in pensions AUM globally and £179bn in insurance
assets. This expertise was recognised in the 2023 Asia
Asset Management Awards where we won ‘Best
Insurance Manager’. In 2023, our partnership with our
largest client, Phoenix Group, delivered £6bn of gross
inflows (£5.2bn net of reinsurance arrangements) from
their Bulk Purchase Annuities business and £4bn of inflows
from their Workplace Defined Contributions business.
Phoenix and abrdn continue to explore ways to mutually
benefit from and strengthen our partnership.
Funds at
the start of 2022
1
c700
Funds at
the end of
2023
1
c580
23abrdn.comAnnual report 2023
STRATEGIC REPORT
Our businesses – Investments continued
Our strategy in action in 2023
Throughout 2023 we took decisive action to simplify and refocus our
Investments business. By selectively disposing of non-core businesses, and
delivering significant cost savings, we have better positioned ourselves to
deliver growth as global market conditions normalise.
Focusing
our investment
capabilities on areas of
specialism & scale to
capitalise on key themes
shaping the market
P
u
b
l
i
c
m
a
r
k
e
t
s
&
A
l
t
e
r
n
a
t
i
v
e
s
S
a
l
e
o
f
U
S
a
n
d
E
u
r
o
p
e
a
n
M
e
r
g
e
d
o
r
c
l
o
s
e
d
c
6
0
f
u
n
d
s
E
x
c
e
e
d
e
d
t
h
e
£
7
5
m
A
c
q
u
i
s
i
t
i
o
n
s
i
n
t
h
e
m
a
t
i
c
w
i
t
h
c
.
8
0
k
c
l
i
e
n
t
s
a
n
d
p
r
o
s
p
e
c
t
s
A
r
c
h
a
x
t
o
k
e
n
i
s
a
t
i
o
n
P
r
o
c
e
s
s
o
r
g
a
n
i
s
a
t
i
o
n
f
r
a
n
c
h
i
s
e
i
n
c
l
u
d
i
n
g
G
A
R
S
R
e
f
o
c
u
s
e
d
I
n
v
e
s
t
m
e
n
t
s
i
n
t
o
p
r
i
v
a
t
e
e
q
u
i
t
y
b
u
s
i
n
e
s
s
e
s
c
o
s
t
s
a
v
i
n
g
s
t
a
r
g
e
t
s
e
t
s
p
e
c
i
a
l
i
s
m
s
,
i
n
c
l
u
d
i
n
g
v
i
r
t
u
a
l
e
v
e
n
t
s
a
l
l
o
w
e
d
e
n
g
a
g
e
m
e
n
t
N
e
w
C
I
O
I
n
v
e
s
t
m
e
n
t
R
e
s
t
r
u
c
t
u
r
e
d
m
u
l
t
i
-
a
s
s
e
t
s
o
l
u
t
i
o
n
s
3
0
0
+
p
r
o
p
r
i
e
t
a
r
y
,
s
p
o
n
s
o
r
e
d
,
a
n
d
f
o
r
o
v
e
r
£
1
0
5
m
o
f
m
o
n
e
y
m
a
r
k
e
t
f
u
n
d
D
e
l
i
v
e
r
o
p
e
r
a
t
i
n
g
m
o
d
e
l
e
f
f
i
c
i
e
n
c
y
I
m
p
r
o
v
e
f
l
o
w
s
D
r
i
v
e
f
u
t
u
r
e
i
n
v
e
s
t
m
e
n
t
p
e
r
f
o
r
m
a
n
c
e
f
o
u
r
T
e
k
l
a
C
a
p
i
t
a
l
C
E
F
s
f
o
r
t
h
e
I
n
v
e
s
t
m
e
n
t
s
b
u
s
i
n
e
s
s
Annual report 2023abrdn.com24 Annual report 2023abrdn.com24