Billions shed by Standard Life on merger worries

Funds giant Standard Life saw billions of pounds march out of the door after a wave of upheaval from its tie-up with a rival sent a chill through big-money clients.

The firm, which stunned the City earlier this year with plans to merge with fellow Scots Aberdeen, said a wall of money leaving some funds accelerated after gatekeepers to the City’s billions turned bearish on the deal, which was unveiled in March.

Chief executive Keith Skeoch said: “Gross flows were lower on the institutional side because people were circumspect about the benefits of the merger. I wouldn’t be surprised if that remained in place for a few more months.”

The Yorkshire-born boss, who will lead the group alongside Aberdeen chief Martin Gilbert, expects the slowdown to “ease” as it progresses with the merger integration.

The company had £3.7 billion of net outflows for the six months ending June, compared with £900 million of cash flooding in the same period last year.

The exodus was driven by funds leaving Gars, its flagship internal hedge fund unit, and lower levels of money put to work from IFAs.

Consultants and finance advisers have taken a wait-and-see approach before recommending Standard Life to clients, given uncertainty surrounding the company due to the merger.

Funds in Gars, an acronym for global absolute return strategy, have also suffered with outflows for the period of £5.6 billion due to poor performance and the entry of rivals.

The figure is higher than the £4.4 billion that left it in the second half of last year and the £400 million inflow for the first half.

Rival funds from the likes of Aviva, Invesco and Baillie Gifford have been swiping money traditionally destined for Standard Life’s Gars.