Standard Life Drops as Inflows Miss After Manager LeavesSarah Jones
Standard Life Plc declined in London trading after new client money into savings and investment products missed analysts’ estimates after the manager of its flagship fund departed.
Net flows of long-term savings increased 11 percent to 2.8 billion pounds ($4.5 billion) in the first nine months of the year, the Edinburgh-based company said in a statement today. That was less than the 3.6 billion pound average estimate of 16 analysts surveyed by Standard Life. The stock dropped about 4 percent.
Euan Munro, the former head of multi-asset investing, left Scotland’s biggest insurer in July to join competitor Aviva Investors as chief executive officer. During his time at Standard Life, Munro started the company’s multi-asset Global Absolute Return Strategies Fund, also known as GARS, helping its assets swell to 17.8 billion pounds.
The numbers reflect “both an exceptionally strong first-half performance and third quarter that was negatively impacted by a slowdown in multi-asset flows,” Barrie Cornes, a London-based analyst at Panmure Gordon & Co. wrote in a note to clients. He has a buy rating on the stock. “We understand that six out of the eight top U.K. consultants have stuck with GARS post the departure of some of its personnel, but clearly the loss of recommendation from the other two is having an impact.”
Net inflows into Standard Life’s multi-asset funds in the third quarter were 1.1 billion pounds compared with 7.1 billion pounds in the first half, according to Cornes, who added that inflows were also hurt by some Indian cash funds that saw “significant net outflows” in the third quarter.
Third-party net inflows at Standard Life Investments were 8.3 billion pounds in the nine months to Sept. 30. That missed the average analyst estimate of 9.7 billion pounds.
The stock dropped 14.7 pence to 354.5 pence in London, the biggest decline since Aug. 15.
Net inflows dipped “in August to September after the departure of Euan Munro,” wrote Oliver Steel, a London-based analyst at Deutsche Bank AG, in a note to investors, reiterating his buy recommendation. “Management believes that the bulk of the mainly institutional outflows have now happened, and reports that net inflows into GARS are now seeing an increase.”
Standard Life reported a 20 percent increase in sales of long-term savings products to 17.3 billion pounds, while fee-based revenue increased 15 percent to 1.06 billion pounds from a year earlier.
“Standard Life has made good progress in the first nine months of the year, delivering substantial growth in net flows, assets and fee-based revenue,” Chief Executive Officer David Nish said in the statement. “In the U.K., both our corporate and retail businesses have performed well.”