Aberdeen Asset Management has reported outflows reduced to £2.5bn in the first three months of the year, while reports over the weekend suggest £35m has been set aside by the group and Standard Life to retain key managers following their proposed merger.
This morning in its half-year report, Aberdeen reported net outflows of £2.5bn in the first quarter of 2017, a marked slowdown from net outflows of £10.5bn in Q4 2016. However, this still means the group has reported 16 quarters or four years of consecutive outflows.
Aberdeen said the reduction in outflows was a result of "improving sentiment towards emerging markets", with chairman Simon Troughton noting the group's EM equity and bond strategies saw £800m of net inflows during the first three months of the year.
In addition, the group's multi-asset diversified growth strategy has attracted £800m of net inflows throughout the last three months of 2016 and first three months of 2017.
Meanwhile Parmenion, the group's digital advisory arm, saw inflows of £500m bringing AUM to £3.3bn, some 75% higher than when the group announced the acquisition in late 2015.
However, overall AUM for Aberdeen was lower than at the start of the period at £308.1bn on 31 March 2017, compared to £312.1bn on 30 September 2016.
Revenues were up 10.6% to £534.m for the six-month period, as Troughton explained "new business was being won at higher margin business than is being lost on outflows", while underlying profit before tax increased 19.8% to £195.2m.
Martin Gilbert, chief executive of Aberdeen, said: "These figures reflect improving sentiment towards emerging markets combined with our transition to becoming a full-service asset manager offering a broad range of capabilities via multiple distribution channels globally.
"We have experienced net inflows into our emerging market strategies in recent months and encouragingly into our diversified growth strategies and the Parmenion platform during the period.
"These, together with favourable market conditions and the delivery of £70m of cost savings, have resulted in a healthy rise in revenues and profits."
The slowdown in outflows comes as the prospectus for the proposed £11bn Aberdeen/Standard Life merger is set to be published this month, with a shareholder vote slated for June and the deal due to complete in Q3.
Gilbert added this morning: "Our proposed merger with Standard Life is on track and the combined businesses will form a world-class investment company strengthening further both companies' ability to meet the evolving needs of clients and customers."
Meanwhile, Sky News has learnt that Aberdeen Asset Management and Standard Life have agreed to pay around £35m in retention bonuses to prevent key fund managers leaving during the merger process. Star managers running a significant level of assets include Hugh Young and Devan Kaloo at Aberdeen, and SLI's Harry Nimmo.
According to the report, the bonuses - which are understood to be payable to managers who remain with the combined group for at least three years - are part of the one-off £320m integration cost mentioned in the companies' merger announcement.
A Standard Life spokesman declined to confirm to Sky News on the size of the retention bonuses.
He said: "At Standard Life Investments we have a strong team-based ethos, and this is underpinned by remuneration arrangements which are structured to reward performance over the long term and encourage retention of our talent.
"We have specific plans in place to engage and retain our talent through the merger process."
Aberdeen could not be reached for comment by Sky.
Soon after the merger proposal was unveiled in March, it was announced that David Cumming, head of equities at Standard Life Investments, is to leave the company to pursue other interests.
Commenting on this morning's results, Laith Khalaf, senior analyst at Hargreaves Lansdown, said: "Aberdeen has been leaking funds for four years now, but over the last six months the fund group has been bailed out by rising markets and weakening sterling, which have both helped to buoy assets under management.
"Without these favourable effects, profit growth would not have looked quite as rosy, though the company has delivered on its target of making £70m of annual cost savings, which also helps to cushion the blow of lost assets.
"Against a backdrop of weak flows, the rationale of a merger with Standard Life looks pretty compelling, particularly given the gauntlet laid down by passive funds for the active fund industry."
Peter K. Lenardos, analyst at Royal Bank of Canada, added: "These results show that Aberdeen has returned to growth, and as the inflection in net flows continues (including equities) and cost control surprises on the upside.
"The results also reinforce our opinion that Aberdeen is attractive to value, income and growth investors, and we are unable to justify that Aberdeen's valuation is the lowest in our coverage universe of seven asset managers."
Joining London team
Previously at Old Mutual Wealth
Will introduce a cap on cost of care
Inertia has become a key policy mechanism