18/02/2008

Record 2007 new business figures

Standard Life Investments’ new business results for the year ended 31st December 2007:

• Third Party net investment sales of £7.9bn up over 23% [2006: £6.4bn]
• Total net UK institutional sales of £3.9bn, an increase of 18% [2006: £3.3bn]
• UK net mutual fund sales rose over 15% to a record £1.5bn [2006: £1.3bn]
• Third party funds under management up almost 24% to £47.7bn [31 Dec 2006: £38.5bn]
• Total funds under management increased by 8.5% to £143.4bn [31 Dec 2006: £132.1bn]

Keith Skeoch, CEO of Standard Life Investments, said:

“2007 was an outstanding year for Standard Life Investments’ with record levels of sales, record funds under management and a new high for third party funds under management. This has been achieved as a result of our highest ever institutional and mutual fund sales, strong inflows into Private Equity, and increasing sales in our main overseas markets of Canada, Europe and the Far East.”

“It has been particularly pleasing that we have been able to deliver record results against a background of volatile markets and a global credit crunch. This demonstrates the confidence that investors have in our investment process, strong performance and the high service levels we strive to deliver, and that our clients have come to expect. External recognition of our people, processes, products and long term performance record continues to grow with Standard Life Investments winning a record 13 industry awards during 2007.”

“While the first half of 2008 is shaping up to be a challenging period for retail sales there is no evidence that institutional business will be materially affected. Research*, which backs up our own experience, shows that institutional funds will increasingly favour specialist and absolute return roducts, and that their appetite for alpha will grow significantly due to the need for higher returns.”

“With institutional sales accounting for around 80% of our business Standard Life Investment’s expertise in Global Absolute Return Strategies, Global Real Estate, Private Equity and Global Equities means that we are well positioned to continue the success story that is Standard Life Investments.” *Watson Wyatt ‘2020 Vision’ - research on the future pensions and investment landscape Jan 2008

New Business

Net sales increased to a record £7.9bn, up over 23% from £6.4bn last year. Total UK Institutional sales have generated record net inflows of £3.9bn, an increase of 18% on 2006. This included a number of new mandates, among them UNISON (£140m), The Pensions Trust (£140m), Rentokil (£340m) and Taylor Wimpey (£120m).

Overseas sales continued to grow with particularly strong increases in Canada, where new sales reached £521m, and Europe with new sales of £27m - up six fold on the 2006 figure [£4.5m]. Our joint venture with HDFC AMC in India realised sales of over £517m.

Recognition of our expertise in alternative asset classes was demonstrated by a 31% increase in Private Equity inflows up from £354m in 2006 to £464m in 2007. 2007 was also the first full year of marketing for our Global Absolute Return Strategy fund. From a standing start the fund has proved popular winning over 20 institutional mandates resulting in funds under management of over £240m.

Despite a sharp slow down in the fourth quarter Standard Life Investments’ Mutual Funds range enjoyed record net inflows from UK retail customers of £1.5bn during 2007, up from £1.3bn for the same period last year.

Performance

2007 saw steady investment performance across a wide range of asset classes in both institutional and retail markets.

13 out of 23 pooled pension funds beat the median of their respective sector during the 12 months to 31st December 2007¹. Over the last three years 20 out of 22 funds in the pooled pension fund range outperformed their peer groups.

The majority of our 24 OEIC and Unit Trusts continued to outperform their respective peer groups with seven achieving top quartile performance and the European Equity Growth Fund returning top decile performance². The management of the range was also recognised with 18 of the 24 eligible and actively managed funds rated ‘A’ or above by Standard and Poor’s.

Over 70% of retail Pension Funds were above median over one year, with 22% upper quartile. Overall 62% of retail funds outperformed their respective peer groups.

Products

During 2007 Standard Life Investments continued to widen and diversify the range of products it offers.

Two Global REIT funds were launched in January. Investing largely in Real Estate Investment Trusts or securities and companies principally engaged in real estate activities on a global basis, the funds aim to maximise total return from income and capital growth over the longer term.

In April we unveiled FUNDCHOICES, our new ‘investment only’ fund platform for defined contribution (DC) schemes. This offers DC clients the ability to access a wide range of funds, run by both Standard Life Investments and other investment houses, covering a broad spectrum of asset classes and investment styles.

September saw the launch of two new funds. The European Equity Ethical Fund which is aimed at investors looking for exposure to European equities in an investment product which reflects their concerns on social and environmental issues. The European Smaller Companies SICAV, aimed at European institutional and retail investors, aims to provide capital growth over the medium to longer term by investing in 40 to 60 ‘high conviction’ stock ideas.

The India Equity SICAV, which was launched in October, is aimed at institutional and retail investors in Continental Europe. The objective of the fund is to generate long term capital appreciation through a portfolio of instruments predominately in equity and equity-linked instruments of companies listed on the major stock exchanges of India.

Our range of Strategic Solution products which includes Liability Managed Credit funds and the Global Absolute Return Strategy fund are growing in popularity as institutional investors increasingly look for capital efficient solutions designed to meet the specific needs of clients.

People

Standard Life Investment's commitment to strengthen and broaden its global talent pool was highlighted by the appointment of several key people:
Colin Walklin, Finance Director.
Harry Humble, Investment Director - Property Product Specialist.
Steven Khun, Head of Client Sales and Client Service (USA).
Jay McKelvey, Real Estate Analyst - The Americas.
Anton Kwang, Listed Property Analyst – Asia Pacific Region.
Caspar Trenchard, Investment Director, - UK Smaller Companies Team.

1. All figures to 30/12/07. Data from Russell/Mellon, a provider of institutional investment information.
2. Micropal, bid to bid for the period to 01/01/08.