Standard Life Aberdeen's Gars strategy was hit with a £10.7 billion net outflow in 2017.
This contributed to an overall net outflow of £22.1 billion for the firm's investment engine, Aberdeen Standard Investments.
This continues the run of outflows from its key Gars multi-asset strategy, which suffered a £4.3 billion outflow in 2016.
'Investment performance sentiment resulted in a slowdown in gross flows and increased rate of redemptions,' the firm said in its update.
It also pointed that while current Gars performance is ahead of its benchmark currently, over one, three and five years in remains behind target.
'Absolute return strategies, e.g. Gars, made good progress in recovering ground following their challenging 2016 and, while flows in this area remained negative in 2017, we have seen the start of a turnaround as investors start to question how much longer the rally in equity markets can last,' Standard Life Aberdeen said in a statement.
'These trends bode well for our multi-asset business which has proven highly attractive to investors in the wake of financial turbulence.'
Multi-asset (excluding Gars) generated net inflows of £3.8 billion versus £0.7 billion in 2016. This included continued demand for MyFolio and Parmenion products, which delivered net inflows of £2 billion and £1.3 billion respectively.
The results represented the company's first set of numbers since the £11 billion merger between Standard Life and Aberdeen Asset Management, which is co-chaired by Keith Skeoch (pictured left) and Martin Gilbert (right) last summer.
Standard Life chair Sir Gerry Grimstone described the year as momentous.
'The merger of Standard Life plc and Aberdeen Asset Management, two highly complementary businesses, was the beginning of the exciting next chapter of our story,' he said.
'I'm happy to say we're on track to deliver on the plan we set out for you last year as our integration progresses at pace.
'Pooling our expertise has shown us that neither of the two predecessor companies was fully realising its true potential when serving its customers and clients around the world and we are determined to make the most of this opportunity to become even more client-focused, more expert and more proficient.'
The results showed that Standard Life Aberdeen was selling its insurance arm to Phoenix in a £3.2 billion deal.
Grimstone also announced he will retire from the business next year once a successor is found.