(Bloomberg) -- January in Edinburgh is always formidable, but this year’s post-Hogmanay malaise is proving particularly tough for the city’s asset management industry as two of the biggest companies announce steep job cuts. 

Abrdn Plc — created in 2017 through the tie-up of Standard Life and Aberdeen — said on Wednesday it was axing 500 jobs, or 10% of its staff, in a fresh cost-cutting round. The firm has lost billions in assets since its creation despite the turnaround efforts of boss Stephen Bird. 

Clients pulled £12.4 billion ($15.8 billion) from its funds in the second half of 2023 alone, it said in its earnings statement. 

A few streets over in Edinburgh’s gothic warrens, equity growth house Baillie Gifford is doing its own cost review. Following two years of poor fund performance in its tech-heavy investment portfolio, the firm is expected cut dozens of jobs and shut down a number of small funds, Bloomberg News has reported. 

Although the partnership’s woes are at a smaller scale than Abrdn’s chronic problems, both asset managers are grappling with the issues of an industry facing the threat of cheaper passive ways to invest. Scotland serves as a microcosm of active asset management, where from the City of London to Wall Street, fund houses are striving to remain relevant. 

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US heavyweights such as T. Rowe Price Group Inc. as well as smaller players including Axa Investment Management, Jupiter Fund Management Plc and M&G Plc have recently shed roles or tried to streamline operations to reduce overheads.

In October, Bloomberg News reported that since 2018, more than $600 billion had headed for the exits from investment funds at T. Rowe, Franklin Templeton, Abrdn, Janus Henderson Group Plc and Invesco Ltd. Meanwhile, cheaper passive products accounted for half of all assets in US mutual funds and ETFs, up from 47% in 2022 and 44% in 2021.

Scottish members of the Investment Association have seen their assets fall faster than the UK average, reaching about £500 billion at the end of 2022 — back to the levels of a decade ago, according to a survey by the trade body. Edinburgh is still the biggest British hub for fund management outside London, though a fraction of the £8.8 trillion managed in the UK overall. 

With higher income taxes north of the border and jobs concentrated in a smaller number of offices, the Scottish capital could be vulnerable to more losses. On the other hand, the city continues to draw investment from international investment firms. 

BlackRock Inc. is so proud of its presence in the city that it’s adorned the office walls with its own corporate tartan. It’s also about to become the new owner of Edinburgh Airport, as part of its acquisition of Global Infrastructure Partners. 

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