Aberdeen stands up to squalls as customers rein in equity withdrawalsComments Off on Aberdeen stands up to squalls as customers rein in equity withdrawals
CUSTOMERS took a breather from pulling cash out of Aberdeen Asset Management equity funds last quarter, helping the granite-city fund manager weather market storms battering its business.
The Scottish group, founded in Aberdeen in 1983, saw £883 million of equity investments walk out the door in the three months ending September, the 14th consecutive quarter of outflows but the slowest pace in two years.
Aberdeen’s equity funds are among the most profitable types of products it sells, cheering investors and sending shares up as much as 4%.
“We’re not seeing the level of outflows we were seeing and sentiment has been turning. We had a good quarter in terms of equities,” chief executive Martin Gilbert said.
Pre-tax proft was £352.7 million, above the £329 million the City expected, thanks to higher performance fees. Revenues of £1 billion were also ahead.
Assets under management were bolstered by £20 billion-plus boost from sterling’s drop and £32 billion shot in the arm from the rising tide of stock markets.
What with Aberdeen’s acquisition of small funds such as Arden Capital, Advance Emerging Markets and Parmenion Capital last year, it was enough to cushion the blow of £32.8 billion pulled by investors, sending assets under management up 10%.
Despite the ray of sunshine, dark clouds are massing on the horizon. A regulatory clampdown on fees charged and the rise of technology-driven passive funds such as ETFs, pose a challenge to Aberdeen’s brand of active management.
US President-elect Donald Trump is also a risk because his anti-trade rhetoric has damaged Aberdeen’s emerging markets stomping ground.
Gilbert has promised to clamp down on costs to help Aberdeen get through the rough patch. He believes the group is still on track to make cost savings of £70 million by March.
Operating costs were £679 million this year, up from £670.3 million last year. Aberdeen has a big office in Singapore which costs more to run now than before the Brexit vote.