Investor Relations Newsletter Winter 2018

“Hello and welcome to the Winter 2018 edition of our quarterly Investor Investor Relations contacts Relations Newsletter. Since the completion of our merger on 14 August 2017 we have announced several important corporate developments, including the successful IPO of Jakub Rosochowski Investor Relations Director HDFC Life, the proposed IPO of HDFC AMC, our first subordinated debt offering as a combined entity and our Q3 AUMA and flows update. These announcements are Tel: +44 (0)131 245 8028* summarised in this newsletter and we include links to our issued pro forma financial Mobile: +44 (0)751 529 8608* information. Email: [email protected]

“As well as these developments, we are continuing to expand our range of “new active” Neil Longair investment capabilities. We highlight some of our launches in this newsletter including our Investor Relations Manager first ‘’ fund. We also highlight the strength of our Quantitative Investing business and the results of our survey of Asia Pacific insurance companies. Tel: +44 (0)131 245 6466* Mobile: +44 (0)771 135 7595* “This year we have seen record inflows into , our pensions and savings Email: [email protected] business, driven by our success in the UK advised platform market. Barry O’Dwyer, CEO of Chris Stewart Standard Life, discusses some of the reasons behind our success in this market. Investor Relations Analyst “In addition, we highlight key facts about our two associate businesses in India following the successful IPO of HDFC Life and the proposed IPO of HDFC AMC. Finally we discuss our Tel: +44 (0)131 245 2176* improved ranking in the Dow Jones Sustainability Index, a key reference point for investors Mobile: +44 (0)752 514 9377* who integrate sustainability considerations into their portfolios. If you have any questions or Email: [email protected] would like to arrange a meeting please contact a member of the team.” Jill McCabe Investor Relations Consultant Successful IPO of HDFC Life completed 500 482Rs • IPO priced at 290Rs – top of price range Tel: +44 (0)131 245 6800* 450 • Proceeds from IPO of c£370m Mobile: +44 (0)752 573 2147* Email: [email protected] • Commenced trading on 400 *Calls may be monitored and/or recorded to 17 November 2017 protect both you and us and help with our • Share price performance: training. Call charges will vary. 350 • Day 1: + 18.6% 300 • IPO to 16 January 2018: +66.4% Addresses

HDFC Life share price (Rs) HDFC Life share Ticker: HDFCLIFE:IN plc 250 • Remaining stake of 29.35% 6 St Andrew Square • Market cap*: £11.0bn / 970Rs bn EH2 2AH * As at 16 January 2018 Web: www.standardlifeaberdeen.com This quarter’s features … @SLA_plc Useful financial information Upcoming events Summary of financial information issued since the completion of our merger and our sector classification as an asset manager. 26 to 28 February 2018 Full year results 2017 roadshow, Expanding our range of “new active” investment capabilities 6 March 2018 We take a look at our latest fund launches including the Global Equity Impact Fund; the Group investor breakfast, Edinburgh Private Equity Secondaries Fund; the Secured Credit Fund; and the Global Short Duration (Keith Skeoch and Bill Rattray) Corporate Bond Fund. 21 March 2018 Morgan Stanley European Financials Building on the strength of our adviser platforms Conference, London Our award-winning platforms saw record net inflows in H1 2017, with our continued success (Martin Gilbert and Bill Rattray) driven by the functionality, investment choice and support we offer advisers. 24 April 2018 Berenberg UK Corporate Conference, London Insight into Quantitative Investing 15 May 2018 Our Quantitative solutions and how we construct Smart Beta and Better Beta portfolios. KBW European Financials Conference, London Asia Pacific Insurance Survey 23 May 2018 Two years on from our award-winning survey on the European insurance industry, we take Autonomous 2018 Rendez-Vous Conference, an in-depth look at the latest trends impacting Asia Pacific insurance companies and the London implications for their investment strategies. Our associates in India Financial calendar Key facts about our associate businesses in India – HDFC Life and HDFC AMC. 23 February 2018 Full year results 2017 Dow Jones Sustainability Index 7 August 2018 Our 95th percentile ranking in the Dow Jones Sustainability index. Half year results 2018 Important notice: The material within this newsletter, including the web articles, is for informational purposes only and does not constitute an offer to sell, or solicitation of an offer to purchase any security, nor does it constitute investment advice or an endorsement with respect to any investment vehicle. Investor Relations Newsletter Winter 2018

Useful financial information

On 14 August 2017 the merger of Standard Life and Aberdeen completed to form Standard Life Aberdeen plc, one of the world’s largest investment companies. Following the completion of the merger we have issued several announcements as well as pro forma financial information. Completion of our merger and classification as an asset manager Click to visit our new group website The all-share merger was implemented through a scheme of arrangement which became effective on 14 August. Standard Life plc was renamed Standard Life Aberdeen plc immediately following the Scheme becoming effective. Holders of Aberdeen shares received 0.757 of an ordinary share Standard Life Aberdeen in exchange for each Aberdeen share. As a result 997,661,231 new shares were issued and our total number of ordinary shares is now 2,977,229,231. The Standard Life Aberdeen ticker is SLA and we are classified in the FTSE “Asset Management” Click to visit subsector and the MSCI “Other Diversified ” sub-industry. Aberdeen Standard Investments’ new website FTSE classification MSCI classification Industry 8000 Financials Sector 40 Financials Supersector 8700 Financial Services Industry 4020 Diversified Group Financials Sector 8770 Financial Services Industry 402010 Diversified Financial Services Subsector 8771 Asset Managers Sub- 40201020 Other Diversified industry Financial Services Debt issuance and pro forma information On 13 October 2017 we successfully undertook our first debt issuance as a combined group, issuing sub-debt of $750m at a fixed rate of Click to download 4.25%, swapped to Sterling at 3.2%. pro forma financial information As part of the debt issuance a prospectus was published containing pro forma information for Standard Life Aberdeen plc for the year ended 31 Click to view our debt December 2016 and additional summary financial information for the instruments year ended 31 December 2015.

Q3 AUMA and flows update On 15 December we issued an update on AUMA and net flows for the nine months to 30 September 2017. Total AUMA was stable at £646.2bn Click to view our Q3 (31 December 2016: £647.6bn) with a reduction in growth channels net AUMA and flows Click to view our presentation at update outflows to £10.6bn (Q3 2016: £11.3bn) and stable net outflows from the Bank of America Merrill Click to read the Lynch Financials CEO mature channels of £12.8bn. analyst call transcript Conference Alongside the announcement we also issued pro forma AUMA information for 2016, detailed asset class information and additional Click to download Q3 supplementary AUMA and flows information. AUMA and flows information December analyst seminar Following the AUMA and flows update Bill Rattray, CFO, hosted an analyst seminar. This covered the Q3 AUMA update, pro forma financial information, modelling Standard Life Aberdeen and a presentation on Solvency II.

Click to view Analyst Seminar presentation Investor Relations Newsletter Winter 2018

Expanding our range of “new active” investment capabilities

vital role in helping to address these • A forward-looking, long-term approach issues. Through the Global Equity Impact • Active company engagement Global Equity Impact Fund Fund we aim to have a positive social and environmental impact, while still delivering Benefiting from Aberdeen Standard an above-market financial return for our Investments team-based approach clients.” Aberdeen Standard Investments has The Fund combines the expertise of our launched its first ‘impact investing’ Applying the UN’s Sustainable firm-wide equity research capability with product, the Global Equity Impact Fund Development Goals that of our dedicated ESG team and will (“the Fund”). This further expands our have a high-conviction portfolio of 35 to 60 ethical investments range which includes As a framework to develop our own impact . To ensure that companies are the Ethical World Equity Fund, UK and process and analysis, we have adopted making a genuine impact through the European Ethical Equity Funds and the the universally accepted 17 United products they make or the services they Ethical Corporate Bond Fund. Nations’ Sustainable Development Goals provide, each company must intentionally (SDGs). This helps ensure the companies direct its resources towards making a Impacting environmental, social and in which the Fund invests are truly having positive environmental or social governance issues through investing a positive impact – for the ultimate benefit contribution, must actively implement this of the environment, society and clients. All Impact investing involves investing in strategy in its operations and the impact 17 SDGs are incorporated into the Fund companies that focus on generating a must be measurable. and the UN’s associated targets inform the measurable positive social and investment process. The Fund then Sarah Norris, Fund Manager, added: environmental impact alongside financial invests in companies whose activities, returns. While environmental, social and “Asset owners are looking to embrace technologies or products are specifically governance (ESG) analysis has become impact investing but lack appropriate designed to provide solutions in areas an integral tool for investment managers, investment solutions. The UN’s SDGs such as healthcare, education, poverty screening for positive impact is ready to provide a common language for impact and many more. enter the mainstream. solutions that help unlock impact investing The Fund is structured for investors who for mainstream investors. Active Commenting on the Fund launch, Euan want to invest for a better future and is management is an essential component of Stirling, Global Head of Stewardship and managed using five principles: successful impact investing. Engagement ESG Investment said: with management is necessary, both for “Impact investing is not just about • To support the delivery of measurable, impact analysis and to encourage better rewarding those already making a positive environmental and social behaviours and disclosures.” difference, but about shifting the might of impact while seeking to generate the capital market to change the world for strong financial returns the better. The world faces numerous • A bottom-up, company-specific Click to read challenges, from climate change and investment approach more about poverty, to inequality and pollution. As • Rigorous peer review of investment Impact Investing asset managers, we believe we can play a ideas at every stage in the investment process Investor Relations Newsletter Winter 2018

Private Equity Global Short Duration Secured Credit Fund Secondaries* Fund Corporate Bond Fund

Aberdeen Standard Investments has Aberdeen Standard Investments has Aberdeen Standard Investments has completed its fund raising for the SL completed its first round of capital launched a Global Short Duration Capital Secondary Opportunities Fund raising for a closed-ended Secured Corporate Bond Fund (“the Fund”). III (“SOF III”). SOF III will focus on Credit Fund (“the Fund”). As many of the world’s central banks niche or less competitive areas of the The Secure Income and Cash Flow begin to move away from extraordinary secondary market where Aberdeen strategy aims to deliver a reliable monetary policy settings, investors are Standard Investments can leverage the stream of cash flows by investing in a growing increasingly wary of the effect expertise, insights and relationships of diversified portfolio of infrastructure of rising interest rates on their fixed its existing private markets platform. debt, commercial real estate debt, income investments. To help investors $428m was raised from 31 investors private placement bonds and other overcome this challenge, the Fund which is considerably higher than its areas of private credit. The Fund draws seeks to deliver attractive risk-adjusted predecessor fund – SOF II secured on the combined strengths of our Credit returns from a diverse portfolio of global total commitments of $291m. The team, which manages over £100bn of corporate bonds but with significantly investors, 60% UK and 40% North assets, and our Private Markets team, reduced interest-rate risk. America, represent a mixture of public with over £55bn of AUM. Samantha Lamb, Fixed Income (Credit) and corporate pension schemes, multi- Investors have committed £350m at the Investment Director, commented: family offices and high net worth first close, representing around half of individuals. The total raised across the “Fundamental credit research and the final fund size target of £600m to three secondary opportunities funds is conviction views on companies are £800m, with capital from a number of now over $900m. critical to our alpha generation. By large UK corporate pension schemes. investing primarily in short-maturity Stewart Hay, Head of Institutional Barry Fricke, Private Credit Investment bonds, the Global Short Duration Client Solutions, commented: Director, commented: Corporate Bond Fund is an option for “Clients have been very supportive of investors concerned about interest-rate “Secure income strategies can be an the secondaries strategy since it was risk who continue to seek value from attractive way for pension schemes to launched in 2014. To have reached credit spreads and meet their growing annual cash flow over $900m of capital for the across a global credit opportunity set. needs while capturing illiquidity premia. programme demonstrates the strong By investing in a diverse range of “Although we are conviction investors, demand for niche private equity private credit assets in a single fund, we have an approach that tailors credit exposure. We worked closely with our investors are able to access relatively selection to the overall macroeconomic investors in the initial stages of product uncorrelated areas of the economy in environment. We focus on adding value development to come up with a an integrated way. This should allow a from idiosyncratic credit risk but with strategy and fee structure that meet more selective approach to deploying the risks and themes of the portfolio their needs.” capital, and result in a portfolio that is adjusted to reflect macroeconomic and * The private equity secondary market provides liquidity in an illiquid asset class by allowing the exchange of interests and less sensitive to overall GDP growth geopolitical factors.” existing commitments in private equity funds between buyers and general market volatility.” and sellers. Investor Relations Newsletter Winter 2018

The targets a distribution UK, e-commerce has grown rapidly and Aberdeen Standard yield of 5.5% per annum, predominantly significantly in recent years. Europe is European Logistics Income in the form of dividends, and a total return growing too but from a lower base and PLC for investors of 7.5% per annum (both in the pace is set to increase as comfort Euro terms). with shopping online grows and big retail brands expand their operations on the Aberdeen Standard Investments has Evert Castelein, based in Aberdeen continent. This is going to lead to more launched its first investment trust as a Standard Investments’ Amsterdam office, demand for large, specialised combined business – Aberdeen Standard will lead the team supported by Ross warehouses where goods are picked, European Logistics Income PLC. Braithwaite and Attila Molnar – and by sorted and distributed together with Andrew Allen, Global Head of Real Estate The European Logistics Income smaller units on the outskirts of urban Investment Research. investment trust (“the investment trust”) centres to fulfil the so-called ‘last mile’ raised £187.5m of equity through an Commenting on the launch, Martin element of delivery.” Initial Placing and Offer for Subscription. Gilbert, co-Chief Executive of Standard The shares were admitted to the Life Aberdeen said: Premium segment of the Official List of “This is the first investment trust launch the UKLA and to dealings on the London by Aberdeen Standard Investments and Click to read more about Exchange, with trading starting on Aberdeen Standard European to have raised £187.5m is an excellent Friday 15 December 2017. Logistics Income PLC result and delivers a strong platform from Aberdeen Standard Investments is the which we can grow this exciting asset second largest real estate investment class. manager in Europe and has an “Our discussions with a broad range of established track record of managing real investors had led us to believe that long- estate assets in listed close-ended term exposure to income generating structures and 20 years extensive logistics assets across Europe within a experience in logistics. closed end structure would have wide Leveraging this expertise, the new appeal and this has proven to be the case investment trust taps into the rapid growth with pension funds, multi-asset of e-commerce across Europe by managers, wealth managers and retail investing in European logistic properties investors subscribing to the issue.” such as large ‘big box’ ultra-modern Pertti Vanhanen, Global co-Head of Real warehouses and local ‘last mile’ Estate at Aberdeen Standard distribution centres. Occupier demand is Investments, added: strengthening and these properties typically benefit from long-term “This is another encouraging continuous leases which are annually development for Aberdeen Standard inflation-linked, thereby providing solid Investments’ real estate business. rental income alongside the potential for capital growth. “The logistics market is central to the future of the e-commerce industry. In the Investor Relations Newsletter Winter 2018

Building on the strength of our adviser platforms

• Our award-winning platforms saw record net inflows in H1 2017 • Enhanced functionality, investment choice and adviser support are core reasons for our continuing success • Continuing to benefit from our investment company business model

The financial adviser market continues to picking up strongly in response. evolve and grow at great pace Our platforms provide high quality support The trend continues in the UK towards defined for advisers and their clients contribution pensions and tax-exempt There are a set of core reasons for our Individual Savings Accounts (ISAs) as the continued strength in the platform market, Barry O’Dwyer primary investment vehicles for customers’ many of which are reflected in recent award long terms savings. Recent regulatory CEO wins. changes, most notably Pensions Freedom, Standard Life have given customers much greater choice and 1. Enhanced functionality flexibility in managing their finances. With this increased personal responsibility for long term Wrap and Elevate’s highly flexible pension, savings comes a greater demand for financial drawdown and investment functionality allows advice. advisers to tailor financial plans that address the wide range of goals individuals often have Standard Life has again Technology is central to this growth in retirement – taking income today, investing opportunity, with financial advisers increasingly achieved success at the for income in the future and investing for their looking to platforms to enhance the service legacy. In particular, the investment made to UK platform they provide to customers, scale their deliver Wrap’s Tailored Drawdown offering, tax awards winning: businesses to improve efficiency, reduce risk planning tools and range of supporting • Best large platform and manage change. investment options resulting in us winning ‘Leading platform-enabled retirement provider (fourth year Record platform flows in H1 2017 running) proposition’ at the Schroder’s UK Platform • Leading platform-enabled Our Wrap and Elevate platforms enjoyed Awards in September 2017. retirement proposition record flows in H1 2017, with combined net 2. ‘Whole of market’ investment choice • Leading platform for model flows of £3.7bn representing an annualised portfolio services 17% of opening AUA. We now have over • Best platform for adviser Our platforms’ wide choice gives advisers service £50bn invested across our platforms, with access to leading ‘whole of market’ investment Wrap AUA growing at a CAGR of 29% over the solutions. Wrap alone has over 8,000 last 5 years. We are particularly pleased with investment options available including over 300 advisers’ positive reaction to our acquisition of pension funds, over 2,000 mutual funds as well Elevate in Q4 2016, demonstrating our long- as access to stocks and shares, commercial term commitment to the market, with flows

Consistently strong growth in platform AUA Record net inflows in H1 2017

£49.2bn £50bn £44.2bn £12.1bn £5bn £4.4bn £4.2bn £2.3bn £11.3bn £2.1bn £3.6bn £36.1bn £3.3bn £1.7bn £3.7bn £1.6bn £26.5bn £31.9bn £21.9bn £25.5bn £17.5bn £20.9bn £2.1bn £2.1bn £1.9bn £16.6bn £1.7bn Platform AUA Platform net flowsPlatform net

£0bn £0bn 2013 2014 2015 2016 H1 2017 2013 2014 2015 2016 H1 2017

Wrap Elevate Fundzone H1 H2 Investor Relations Newsletter Winter 2018

property and exchange traded vehicles such as 5. Support through change Investment Trusts and ETFs. This whole of Finally, working together with advisers to plot a market approach enables advisers to select the course through complex regulatory change has most appropriate investment choices for their been a key component of the strength and clients’ needs. depth of relationships we have developed with Managed by other In addition, the scale of our platforms and early successful adviser firms. By supporting a asset managers adoption of super clean pricing has allowed us smooth transition to a fee-based business 69% to secure discounts on 428 share classes model, delivering more robust investment across some of the most popular funds from 14 processes and quickly adapting to the pension leading fund providers in the UK, further freedoms, our platforms have equipped the allowing us to ensure clients get maximum firms we support to focus on their clients and 2016 value for money. growth opportunities rather than business change. Wrap AUA 3. Enabling professional portfolio £31.9bn management Leveraging our investment company model Driven by regulatory change and a desire to We have also benefited from our close working improve client investment outcomes, Wrap has relationship with our asset management Managed by also led the market in enabling the scalable company, particularly in the development of Other Aberdeen management of client portfolios. The first Centralised Investment Propositions such as e.g. cash Standard platform to enable ‘portfolio of portfolios’ MyFolio which increase adviser’s efficiency 10% Investments 21% through its investment hub technology; through providing an efficient and scalable Standard Life Wrap has enabled multi-goal outsourcing option. client investment strategies allowing advisers This, in addition to the discounted heritage-SLI to more accurately target client needs. This is fund range available on Wrap, is one of the particularly relevant to the growing drawdown reasons for c20% of assets on Wrap being market, to manage sequencing risk and invested in SLI funds compared to SLI’s 4.3%1 balance short, medium and longer term income share of the UK Wholesale market. We now needs. have the chance to extend this success to the Through automated routines, the platform Elevate platform, with 2% of Elevate AUA enables the ‘automated individual execution’ of currently invested in SLI funds. centrally-made investment decisions at client We are also looking forward to being able to Click to read more about portfolio level. Security and permission access new innovative investment solutions on our Investment Hub protocols ensure clear controls and competitive terms following the completion of governance between financial planning and our merger with Aberdeen, further increasing discretionary investment activities while also the value and choice we provide to advisers enabling access to the specialist skills of a and their clients. wide range of 3rd party discretionary managers. Wrap’s investment hub technology was also We remain committed to the market long- recognised at the UK Platform Awards winning term ‘Leading platform for model portfolio services’. We remain confident in the long-term growth 4. Quality of service potential of our platforms, with the market expected to more than double over the next Most importantly, both Wrap and Elevate five years. We will continue to support financial continue to support platform customers and advisers as they help customers with complex advisers with excellent service, whether financial decisions, build their businesses and delivered over the phone by our Customer navigate regulatory change. Operations teams supporting Wrap in Edinburgh and Elevate in Basingstoke, or in Advised platform market expected to the field to advisers by our Distribution continue to grow strongly teams. Their ability to embed the platform £1tn

within adviser processes not only supports 2 £825bn operational efficiency, but enables customers to benefit from the full range of services and investment choice available. This was again acknowledged in Standard Life’s award for

Best Platform Service at the same UK Platform UK advised £290bn Awards. £170bn platform market AUA platform market £0tn 2011 2016 2021E

1. Source: Investment Association Q1 2017. 2. Source: Fundscape. Investor Relations Newsletter Winter 2018

Insight into Quantitative Investing

• Quantitative products make use of automated numerical models to form investment decisions • Our offering spans conventional indexation, enhanced indexation, smart beta and derivative products • Our Quantitative strategies are a key building block for our insurance products

An important part of Aberdeen Standard For a conventional passive index tracker that Investments’ offering for a fast growing factor is the market capitalisation which is used market to determine the weighting of each stock. Smarter beta uses alternative, not market Over the past 10 years, Aberdeen Asset capitalisation, factors as fundamental building Management has been increasing its blocks within our optimisation framework. capabilities in Quantitative Investment Sean Phayre Strategies and currently manages £66bn of As a responsible investor we also integrate AUM1. ESG into our investment process when Global Head of constructing portfolios. We have partnered with While new active investment solutions are set Quantitative Investing Sustainalytics, a global leader in ESG to generate approximately 2/3rds of global net research, ratings and analysis, to obtain and inflows, our quantitative capability positions us Sean arrived at Aberdeen in analyse ESG data and also work closely with well to benefit from strong growth expected 2014 as part of the SWIP our in-house Stewardship and ESG teams. transaction. Sean currently from lower cost passives, enhanced passives, drives the development and smart beta and ETFs which are forecast to Combining pragmatic thinking with management of quantitative attract 1/3rd of global net flows – all benefiting quantitative techniques strategies and structured from outflows from more traditional active We have a comprehensive range of product capabilities in both products. quantitative investment capabilities providing Equities and Fixed Income. 2016-2020 Global estimated net flows2 attractive risk-adjusted performance, Sean began his investment transparency and efficiency to assist our clients career at Edinburgh Fund in meeting their investment objectives. We are Managers which later became 19% Alternatives skilled in the use of derivatives to both enhance Aberdeen Asset 6% Active specialities portfolio outcomes and to ensure efficient Management. He established management of cash-flows and corporate c2/3rds Quantitative Investment actions, both are an underappreciated source teams at both companies, 41% Solutions of active return. and latterly was co-head of “New active” Passive equity and fixed income Quantitative Equities and Derivative Strategies. Our passive products provide efficient Global net inflowsGlobal net 34% Passives / ETFs rd exposure to various equity and fixed income Sean holds a PhD in c1/3 segments. Securities are weighted in the Statistics and Modelling portfolio by market capitalisation in order to Science, an MSc in Industrial target the return of a traditional market Mathematics and a BSc (19%) Traditional active capitalisation benchmark, such as the FTSE All (Hons) in Mathematical Share index. Sciences, all from the Following the merger between Standard Life University of Strathclyde. and Aberdeen Asset Management we see Sean is an Associate of the Smart increased opportunities for our quantatitive Beta and UK Society of Investment investments to be used within low cost Professionals (ASIP) and other workplace investment solutions or our MyFolio 18% holds a PGD in Investment range of funds both of which source passive or Analysis from the University low cost componentry from Vanguard and Passive of Stirling. BlackRock. Total Equity and What are Quantitative products? Quantitative Fixed AUM Income Quantitative investment products make use of 1 46% systematic models to build portfolios. These £66bn models make use of certain factors to Better determine the weight of an individual stock in Beta the portfolio. 36% 1. As at 30 September 2017. 2. Source: BCG, July 2016. Investor Relations Newsletter Winter 2018

BETTER Beta: Enhanced Index Equity Our enhanced index funds start with a market capitalisation based index which is then reweighted via a combination of additional factors: Value, Quality, Momentum, Small Size and Low Volatility. We combine uncorrelated individual factors to create a super-factor. Individual factors such as value are themselves comprised of stock level metrics such as Book Yield, Dividend Yield and forward earnings yield. This approach offers the opportunity to generate superior risk adjusted returns compared to a “basic” market capitalisation weighted index at a low cost of manufacture. Common Our enhanced Factor Premise Rationale constructions approach Value Stocks priced low (high) Metrics based on P/B, P/E, We use forward looking data Reflects forward looking relative to fundamental D/P, or composites of these which is particularly relevant company valuations (i.e. measures of value outperform and other fundamental value in periods of changing when banks cut dividends this (underperform) so bias metrics markets and company is reflected in our factor portfolio towards cheap financials design) stocks

Quality Stocks of higher quality Metrics such as ROE, ROA, In addition to the common By focusing on capital companies tend to earnings stability, dividend metrics used we also focus on efficiency and improvements outperform so bias portfolio growth stability, capital expenditures and in quality metrics we aim to towards stocks with a strong financial leverage efficiency of capital utilised capture improvements rather measure of quality than just levels

Momentum Price trends tend to persist so Metrics based on past returns We capture momentum not Academic research has bias portfolio towards stocks (e.g. 6 or 12 months, often only at the stock level but also shown that momentum at the that have recently performed excluding a recent period), at an industry level. We also industry level persists and well sometimes normalised for look at earnings momentum explains most of the excess volatility using forward estimates returns

Small Size Small companies tend to Metrics based on market We capture the small size Return enhancing due to (i) outperform larger ones so capitalisation effect at the portfolio level. small company illiquidity and bias portfolio towards stocks (full or free float) Doing so allows us to benefit credit risk premia and (ii) the with a smaller market from the correlations between rebalancing effect of selling capitalisation stocks stocks that have risen in Price

Low Volatility Contrary to predictions of Metrics based on beta and We capture the low volatility Capturing the effect at the financial theory, less risky realised volatility, e.g. effect at the portfolio level. fund level allows us to hold stocks tend to outperform standard deviation (one year, Doing so allows us to benefit stocks with average volatility riskier ones so bias portfolio two years, three years), from the correlations between which might display other towards stocks with downside standard deviation, stocks desirable characteristics historically low absolute standard deviation of variability of returns idiosyncratic returns and beta

Smart Beta/SMARTER Beta Our smart beta products dispense with a market capitalisation index altogether by building fundamental portfolios in a systematic fashion purely based on factors which we believe will drive investment performance while remaining low cost. These products aim to replicate the performance of four smarter beta indices independently calculated and administered by our custom index partner IHS Markit. These use an optimisation framework to weight stocks entirely based on their ranking across a range of factors. Across all of Click here to watch our our factors a selection of indices are available spanning Global, Developed Markets, Emerging Quantitative Investment Markets, UK, European, Asian, Japanese and Australian equities. team discuss the factors used in constructing Smart Beta portfolios SMARTER BetaTM custom index partner Broad range of multifactor indices 1) Diversified Multifactor Equity Index Family 2) High Income Multifactor Equity Index Family 3) Value Multifactor Equity Index Family • IHS Markit has been appointed as our independent index calculation agent and 4) Quality Multifactor Equity Index Family administrator 5) Momentum Multifactor Equity Index Family • HIS Markit is a world leader in critical 6) Low Volatility Multifactor Equity Index information and analytics Family • It calculates over 15,000 daily index 7) Small Size Multifactor Equity Index Family calculations and over 50,000 global index compositions 8) ESG Multifactor Equity Index Family Investor Relations Newsletter Winter 2018

Asia Pacific insurance survey

• Historically low interest rates and the modernisation of regulatory regimes is reshaping the global insurance industry • Asset allocations are expected to shift as insurers target higher returns and longer maturity assets • Increasing demand for alternative asset classes creates opportunities for external asset managers with experience of managing insurance assets • Aberdeen Standard Investments is strongly positioned to provide specialist investment expertise and capabilities to insurers globally The global insurance industry, with over US$18 making it difficult to generate the returns Bruce trillion1 of life insurance assets across Europe, needed to deliver guaranteed returns. US and Asia, is being reshaped by historically Porteous Although a shift to investment-linked products low interest rates and the modernisation of is underway, guaranteed products represent regulatory regimes. Investment Director, 51% of the asset mix. Insurance Solutions Two years on from our award-winning survey Regulatory change is exposing the asset- on the European insurance industry in the lead liability mismatch in current investment Bruce is responsible for up to the arrival of Solvency II, we turn our lens strategies developing our insurance to Asia Pacific. solutions proposition and The modernisation of regulatory regimes is Aberdeen Standard Investments commissioned business. He joined our asset also leading to greater transparency on risk management business in in-depth research to identify the latest trends and has implications for both the investment impacting Asian Pacific insurance companies 2014 having previously approach and the business model of insurers. and the implications for their investment played a key role in preparing Regulation is driving a fundamental change in strategies. The research was conducted in six Standard Life Aberdeen’s the way that investment decisions are made pensions and savings markets across Asia Pacific – Australia; China; with investment portfolios needing to become Hong Kong; Japan; South Korea; and Taiwan – business for Solvency II more outcome-oriented, with a greater to ensure coverage both in terms of market implementation, including emphasis on controlling risks. leading related strategic size and in terms of markets at different stages change projects, and working of industry maturity. Coverage included both 89% of insurers surveyed indicated the need to with the European insurance domestic and global firms and while it was bring insurance experts and their investment industry and institutions on skewed towards the larger insurers in each colleagues closer together in order to arrive at the delivery of a satisfactory market, some smaller insurers were included. the optimum investment strategy. Solvency II outcome. The combined assets managed by the respondents are over $4 trillion, which indicated the need for represents an estimated 60% of the total Asia Pacific insurance market. closer collaboration 89% between actuarial and Historically low interest rates make investment teams generating the necessary returns challenging Shift in asset allocations expected as insurers target higher returns and longer Insurers face an increasingly difficult maturity assets investment challenge of generating returns in a world of low interest rates. Competitive Cash, bank deposits and fixed income pressures also mean that guaranteed returns securities currently make up almost 71% of have not reduced as fast as bond yields. These total assets invested but our research points to factors increase the investment challenge, significant shifts in asset allocations. As insurers seek both higher yields and longer duration assets, exposure to alternative assets cited asset-liability is expected to increase. 78% of insurers intend 55% mismatch as an issue to increase exposure to infrastructure, 75% intend to increase private equity and 64% are looking to add to real estate.

Click to read more about our Asia Pacific insurance survey 1. Source: Various data feeds, A.M. Best, Cerulli Associates. Investor Relations Newsletter Winter 2018

“Asia Pacific insurers Alternative assets and global equities market requirements. To us, this says that the see increasing becoming increasingly attractive external asset managers most likely to succeed in addressing the issues raised by the insurers exposures to Insurers are increasingly looking beyond in this survey are those with in-house alternatives and going domestic markets for investment opportunities insurance expertise of their own. They global as a way to seek – particularly in alternative assets and global genuinely understand the practical intricacies extra return, equities. 78% of insurers intend to increase of insurance investment in these markets. diversification and international allocations in search of higher better duration returns, better duration matching of liabilities By linking investors and actuaries, internally matching of liabilities. and increased diversification. However, and externally, insurers are more likely to arrive However, with the lack respondents acknowledge that they may lack at the right solution to their investment of in-house capability the internal expertise to do so. challenges. many of them are increasingly open to the Aberdeen Standard Investments is use of external intend to increase strategically well placed in a growing global managers, though international market for outsourcing insurance assets barriers exist that 78% investments Standard Life Aberdeen has a rich insurance external managers will heritage. This is further enhanced by need to navigate. Aberdeen’s distribution reach into Asia, Some insurers indicated an appetite to build an meaning Aberdeen Standard Investments is “The significant asset in-house capability but this takes time and strongly positioned to provide specialist allocations shift taking money. In particular, investing in private equity investment expertise and capabilities to Asia place in Asia Pacific is property and infrastructure requires specialist Pacific insurers. leading insurers to skills just to access the investments, let alone consider outsourcing add value. This presents a further challenge for We already manage insurance assets worth more complex insurers but an opportunity for external asset around £300 billion, as at 30 June 2017, investment mandates to managers who can help fill skills gaps in these including approximately £105 billion for our external managers. This areas. pensions and savings business, Standard Life. offers unique We also manage c£195 billion for a wide range opportunities for active Demand for alternative asset classes of insurance clients across the UK, US, Europe managers, who are creates opportunities for external asset and Asia Pacific. expected to deliver managers Our dedicated insurance solutions team alpha, demonstrate The results of the survey show that includes highly experienced insurance knowledge of local respondents intend to increase allocations to actuaries with detailed knowledge of regulation, regulations, and fill the those asset classes where the use of external as well as risk. As a result, the team can offer investment knowledge managers is highest – alternatives and insurers deep insights across a range of areas: gaps.” international equities. 76% of respondents told us that increasing allocations to alternatives is • Innovative insurance investment solutions David Peng likely to lead to greater use of external asset to generate capital efficient returns in the Head of Hong Kong, managers. However, the results also revealed current low-interest rate environment Aberdeen Standard that external managers must work hard to build • Insurance investment and hedging solutions Investments trust: delivering alpha; demonstrating to efficiently match guaranteed liabilities knowledge of local regulations; and providing and manage risk valuable investment insight. • Detailed knowledge of the very specific regulatory, client-servicing and operational expect the trend to aspects of insurance asset management increase alternative • Experience of developing and implementing assets to drive more transparent and capital efficient life 76% use of external insurance savings propositions, where managers financial risk and return are managed explicitly through the investment solution The need for greater collaboration between componentry provided by Aberdeen investment and insurance teams Standard Investments. The survey highlights the need for greater collaboration between investment and insurance teams. It also highlights the need for greater collaboration between internal and external managers in order to build trust. In Click to read more about particular, external managers must our European insurance demonstrate an understanding of domestic survey Investor Relations Newsletter Winter 2018 Our associate businesses in India

2000 Established 1999

A leading private Indian life insurer – consistently Leading market Second largest mutual funds company in India1,2 ranked in top 3 for sales1 positions

H1 2017: £27m (H1 2016: £17m) Standard Life Aberdeen share of H1 2017: £20m (H1 2016: £16m) 2016: £34m (2015: £21m) operating profit 2016: £35m (2015: £31m)

2013 Paying dividends since 2002 2011 Last capital injection 2003

2 3 Assets under management2: Embedded value : Market cap : EV and market cap / AUM 123.9 INR bn / £1.5bn 970 INR bn / £11.0bn 2,323 INR bn / £28.7bn

1,4 Other Other Market share 4.40% 18.96% 17.2% Standard Life Standard Life 15.8% 15.8% 14.4% 13.7% 14.1% 13.6% 12.6% 13.0% 12.9% Aberdeen Aberdeen 38.24% 29.35% HDFC Life HDFC AMC ownership3 3 ownership HDFC 57.36% HDFC FY13 FY14 FY15 FY16 FY17 51.69% HDFC Life HDFC AMC

41 products across protection, savings, pensions, Manages 57 funds comprising fixed income, equity, Wide product range5 health and annuities gold, exchange traded funds and

c400 branches, c12,000 partner branches and Distributes through banks, national brokerages, IFAs c58,000 individual agents. 5 key bancassurance Vast distribution networks5 as well as D2C. Serviced by 166 HDFC AMC branches partners including HDFC Bank and RBL Bank and over 220 partner branches

A leader in technology – over 98% of policy Clear leader in equities – 18.25% of equity AUM in applications through digital mediums and 70% of Areas of leadership Indian market2 renewal payments through online channel2

Over 57 million lives insured Large customer base Over 6 million accounts

Other Non Participating Fixed Maturity Plans Individual 2% 13% 10% customers Institutional 9% 40% Money Market 57.9m FY17 APE Total AUM 14% Total AUM Diverse mix of customers Equities lives insured 37.4 INR bn4 2,323 INR bn2 2,323 INR bn2 Participating and products 41% 35% Group Retail customers Unit linked Fixed Income 60% 91% 52% 33% Strong growth in premiums Strong growth in profits Strong growth in AUM Total premiums INR bn4 Profit after tax INR bn4 AUM INR bn4

8.2 8.9 2,323 7.3 7.9 194 1,667 148 163 5.5 1,506 4.5 4.2 4.8 1,089 113 121 3.2 3.6 934

FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17 HDFC Life HDFC AMC 1. HDFC Life market share sourced from IRDAI. Market share measured as share of private market total premiums. HDFC AMC market share sourced from AMFI and measured as share of AUM. 2. As at 31 March 2017. 3. As at 16 January 2018. 4. Financial year for HDFC Life and HDFC AMC finishes on 31 March 5. As at 30 June 2017. Investor Relations Newsletter Winter 2018

Sustainability 95th percentile ranking in Dow Jones Sustainability Index

In the Spring 2017 edition of the Investor the Dow Jones Sustainability Indices – Europe Relations Newsletter we demonstrated how and World. Launched in 1999, the DJSI we embed long-term environmental, social and indices were the first global sustainability governance (ESG) considerations into our benchmarks and provide a key reference point strategy and processes. for investors who integrate sustainability considerations into their portfolios. Click here to read our Spring 2017 Investor Relations Newsletter In addition we have improved our ranking so that we are now 5th out of the 82 businesses th As an investment company, we aim to hold assessed in our sector, giving us a 95 ourselves to the same standards we expect of percentile ranking. investee companies as we believe that a focus The important aspect for us is the assessment Stephanie on good governance and an active of ESG issues which are core to our business commitment to ESG responsibility creates and which we have been focusing on as part Leggett long-term value for a business and its of our sustainable business approach. We are stakeholders. especially delighted that we have achieved a Sustainability “Understanding ESG risks and opportunities best in class score for our responsible tax Development Manager enables better informed investment decisions strategy demonstrating an approach that and enhances returns for our customers and reflects all our stakeholders’ interests. We also clients” scored highly in the following areas: Rod Paris • Customer relationship management Chief Investment Officer • Responsible investment and stewardship • Risk management Our approach has once again been • Environmental reporting independently recognised through inclusion in • Community programmes and strategy

MiFID II: Payment for research As announced in 2017, from 3 January 2018, company, with active Aberdeen Standard Investments will absorb all across Equities, Fixed Income, Real Estate and research costs to coincide with the new MiFID Multi-asset solutions. External research is an II legislation which came into effect on that important and valuable input to our exceptional date. in-house research capabilities and we remain committed to our portfolio management teams’ Aberdeen have previously This follows a comprehensive review that announced an annual research ability to maximise active research insights extends the approach taken by Aberdeen cost of £10m, with Standard across regions and asset classes for the Asset Management in 2017 to the newly Life Investments spending benefit of all clients. marginally more than this combined entity. It demonstrates one of the resulting in a c£25m impact immediate scale benefits from the merger by Aberdeen Standard Investments looks forward from 2018 onwards applying the highest standards towards to contributing to the dialogue among our research for the benefit of all our clients across peers, clients, research providers and the globe. regulators to facilitate greater transparency in this area. Aberdeen Standard Investments is a global Press release RNS Press release Press release RNS Press release Investor Relations Newsletter 15 December2017 AUMA andflows update Read more employees UK autostartedOctober enrolledpensions us). 2012,eight in savingmillion overin since it with are years ofauto five enrolment. eight One of the in In October wecelebrated an important milestone our journey in – 2017 14 November enrolment auto of pensions Celebrating fiveyears Savings Pensions and Standard Life Read more 50.01% and24.99%respectively. t Investments such Limited andStandardLife HDFC by anticipatedis resolutionIt AMC. an IPO for way ofanofferbe that shares of HDFC by the sale ofits for IPO will approvedenabling an AMC HDFC of Directors 2017,the Boardof November 30 notes thaton Company The 2017 30 November Proposed IPO of HDFC AMC plc Aberdeen Life Standard Read more the Asset Managementwith Association ofChina(AMAC). Asset Management(Sha Aberdeen Standard Investme December2017 6 Standard Investments Aberdeen obtains private securities fund managementapprovalinChina Investments Standard Aberdeen Read more Subscription.Placing an Initial and Offerfor Income The companyof PLC. raised£187.5mway equity of by pleased tonote the ann is Aberdeen Standard Investments 13 December2017 IPO raises £187.5mvia Logistics IncomePLC Investments European Standard Aberdeen Investments Standard Aberdeen Read more Pensions and Savingsassets under administration increased£182.3bn to December 2016:(31 £171.6bn). Investments £569.7bnwere December 2016: (31 £580.6bn)Standard while Life Total AUMA wasstable at £646.2bn (31 total December 2016: £647.6bn).Within plc Aberdeen Life Standard Read more c£400m.assets underof advice entered intoan has 1825 announces it 3 January 2018 1825 acquires Cumberland PlaceFinancial Management Savings Pensions and Standard Life nghai) Co. nts, announces todaythat nts, Ltd, has secured registration as a priv a secured registrationas Ltd, has agreement to acquire Cumberland Place Financial Management Ltd with Management Financial acquire CumberlandPlace agreement to hat they maintain a post IPO shareholding of at least hat they post IPOshareholdingofat maintain a its wholly foreign-owned ent ouncementAberdeen by St ate securities investmentfundmanager ate AUMA, Aberdeen Standard erprise (WFOE), Aberdeen erprise (WFOE), andard EuropeanLogistics Winter 2018 Press release Press release Press release Press release Press release Press release Investor Relations Newsletter Read more agreementacquire to Bristol-basedHeath Financial Fraser Management,£352m.assets underadvice of with 1825, Standard wholly-owned Life’s 19 October 2017 1825 acquires Fraser HeathFinancial Management Savings Pensions and Standard Life Read more $400mof and considerablypredecessor higherthan securedits fund,which $291m II, ofcommitments. SOF III) Secondary OpportunitiesFund (SOF III Global asset manager, Aberdeen Sta 27 October 2017 Fund Private EquitySecondaries Standard Investments Aberdeen Raises $428m from and NorthAmerican UK Investors for Investments Standard Aberdeen Read more estate debt,placement private real debt, bondscommercial and otherprivate credit. areasof Flow strategy to aims deliver areliable stream of cash flows by investing in adiversified portfolio of infrastructure Aberdeencomp Standard Investmentshas 30 October 2017 secured credit fund Standard Investments Aberdeen Raises £350mfrom pension fundsat UK first close ona Investments Standard Aberdeen Read more for Race. pr is Aberdeen Standard Life 1 November2017 Standard Life named asoneofthe Aberdeen best employers for race plc Aberdeen Life Standard Read more the Global ShortDuration Corporate Bondchallenge.hopethis Fund help investorsovercome we to are growing increasinglyof the effect wary interest of rising rates on their fixedincome investments. By launching extraordinarysettings, monetary policy away from investors central banks beginmove the world’s to many of As 2 November2017 Interest Reducing Rate Risk Launch of Global Short Duration Corporate Bond Fund – Investments Standard Aberdeen Read more exceed £50bn,September benefitingthe twelvemonths to30 £6.7 overnet of 2017. billion inflows from today announcesthatthe Standard Life 9 November2017 Standard Life adviser platforms breaks through£50bn combined AUA Savings Pensions and Standard Life oud to be named by Business the Community asone in Best of the Employers UK’s financial planning busine ndard Investments has completed the ndard Investmentshas combined adviser platformsnow assets under administrationforits (AUA) . The total raised is $428m from 31 investors which is above the target is which 31 investors $428m from The totalraised is . leted its first round of capital leted raising forTheSecure first its Income Cash &

ss, today announces it has entered into an entered into has today announces it ss, Winter2018 fund raising for the SLCapital fund raisingfor Press release Press release Press release RNS Press release Press release Investor Relations Newsletter Read more CEO. of take the on role OperatingScott, currently Chief Chairman. Julie Officer, will taking createdup thenewly position is of the businessgrowth. Steve Murray the stageenters next ofits 1825 today announceschanges September 2017 6 1825 extendsleadership team as it prepares for next stageofgrowth Savings Pensions and Standard Life Read more assessment. the highestyear’s awardedany participantIt’s this numberstars to Estate of in Assessment*. Aberdeen Standard Investments combi has achieveda 11 September 2017 Standard Investments Aberdeen Assessment Receives Star-StuddedGRESB Investments Standard Aberdeen Read more Edinburghin to celebrate their fantastic achievements. globe the across from nominated finalists Aberdeen. Our Thursday 14SeptemberOn Standardfourth 2017,held our annualas we Inspiration andfirst Life Awards our 15 September 2017 people inspiring our recognising – 2017 Inspiration Awards plc Aberdeen Life Standard Read more Subordinated Notesdue 2048 Standardby LifeAberdeenissuer. as plc Prospectus dated 16October2017 relating the issue to 16 October 2017 prospectus Publication ofa plc Aberdeen Life Standard Read more flexibility but also complexity. increasing and responsibilityfreedoms.employees have to risk movedThese newpolicies and employers – decadethe last Over thepensions landscape hasfundamentallychanged, auto enrolment pension from to 17 October 2017 We’re helping toimprove potential outcomes for over amillion of our pensioncustomers Savings Pensions and Standard Life Read more intentiongenerating of measurableand social environmentalpositive impactalongside financial returns. the have that companies in investing involves investing Impact Byrne. Dominic and Norris Sarah by managed firs Standard Investments hastoday Life launched its 18 October 2017 Investing with Impact Investments Standard Aberdeen to furtherstrengthen the c

t impact product, the GlobalEquityImpactFund,co- t ned total of 21 ‘Green Stars’ in the 2017 GRESBReal in ned 21 ‘GreenStars’ total of of US$750,000,000 4.25 per cent Fixed Rate Reset of US$750,000,0004.25 cent Fixed per

attended a spec attended a apacity and capability of its senior leadership team as leadership team senior its of apacity andcapability Winter2018 ial celebrationattheMansfield Traquair Standard Life Aberdeen plc is registeredinScotland (SC286832) at Standard Life House, 30Lothian Road, Edinburgh EH1 2DH. RNS Press release Press release Investor Relations Newsletter w.tnadiebrencm© 2018 Standard Life Aberdeen,images reproduced under licence.All rights reserved. www.standardlifeaberdeen.com Read more Shanghai. in based China, in representative senior its and Ltd., Foreign AberdeenOwned generalWholly Enterprise (WFOE) managerits Asset Management of (Shanghai)Co. Read more 2017, Standard Life Aberdeen May confirms the Pr previously announcedand in as the announcementthe Further to of completion the of 14 August 2017 Directorate Change plc Aberdeen Life Standard Read more 2017. March announced on 6 first The dealbetween companies the two was Life Aberdeen one oft plc, Aber of The merger 14 August 2017 Life completes Standard Management and Asset Merger ofAberdeen plc Aberdeen Life Standard AberdeenStandard Investmentsis 21 August 2017 Standard Investments Aberdeen names new head for China Investments Standard Aberdeen deen Asset Management PL deen Asset he world’s largest investment companies with assets under administration £670bn.largest investment assets under of companies he world’s with pleased to announce that Amy Wang will pleased toannounce that Amy ospectus and the Circular published in connection with the Merger on 9 the Merger connection with published in ospectus and the Circular

the composition of its new Board. new its the compositionof C and Standard Life plc has completed today to form Standard and has completed C Standardtoday form Lifeplc to merger ofStandard

Winter2018 Life and AberdeenLife AssetManagement be joining on 1 September 2017as be joiningon1