SHARES in abrdn were down around 9% this morning as the Edinburgh-based financial services giant said its investment division had felt the effects challenging market conditions in the first half.

The company reported net outflows of £4.4 billion from its investment funds in the first six months of the year, with assets under management dipping to £495.7bn from £500bn. Net operating revenue from investment was 15% lower at £466m because of lower AUM and net outflows, particularly in equities as clients moved assets to debt products and cash as interest rates continued to rise.

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Those challenges offset revenue growth in both abrdn’s adviser division and personal business, the latter including interactive investor (ii), a subscription-based direct investment platform which it acquired for £1.5bn in December 2021. Net operating revenue within the adviser business grew by 12% to £103m, benefiting from higher interest rates, while a six-month contribution from ii helped the personal division increase net operating revenue by 162% to £152m.

Overall, adjusted operating profit increased by 10% to £127m, as net operating revenue rose by 4% to £721m.

The company this morning announced an interim dividend of 7.3p per share, in line with last year, and extended its share buyback programme to £300 million from £150m, underpinned by £535m of cash generated from the sale of stakes in Indian businesses HDFC Life and HDFC Asset Management.

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Chief executive Stephen Bird said: “The first six months of 2023 was an extremely active period for our business. We are continuing to move at pace to executive our strategy in spite of what is a tough market backdrop.

"Thanks to the diversity and resilience we have built into our business with the acquisition of interactive investor last year we grew revenues by 4% revenue year-on-year, and operating profits grew by 10% - the profits delivered by a strong performance across personal and advisor, and these have helped offset the impact of market conditions within the investments business.”

Shares in abrdn were down by around 9.5%, or 20.7p, at 197.8p just after 9am.