Aberdeen Asset Management poised to take advantage of weakness in wake of Brexit vote
Aberdeen Asset Management is better placed than its competitors in the wake of a spate of investment fund redemptions according to chief executive Martin Gilbert.
Speaking to City PM this morning, Gilbert said: “We are very much an emerging markets house, so theoretically we should come out of it better. Much more so than some of our competitors.”
The firm reported assets under management were up to £301.4bn at the end of last month, compared with £292.8bn at the end of March. The business recorded total net outflows of £8.9bn in the third quarter.
“The key driver [to the results] are our three big equity funds” said Gilbert in reference to Aberdeen’s £81bn equity portfolio. Net withdrawals totalling £2.9bn were offset by market increases of £2.7bn and currency gains of £5.1bn.
The currency gains were due to the larger exposure to non-sterling and non-euro investments, according to Gilbert – a product of their overweight position in emerging markets equities.
In reference to the outflows, Aberdeen said equities "showed a small improvement on the previous quarter, partly reflecting investors' comfort with their current exposure to emerging markets".
Gilbert told City PM redemptions were not being made by any particular investor, instead representing a “mixture of retail and institutional investors”.
He also provided advice to any investors thinking of redeeming their investments.
“Keep calm and do nothing is always the best thing to do [during times like these],” he said.
The company statement highlighted that “equity investment performance has continued to recover strongly as markets have again begun to favour the high quality stocks that populate our portfolios”.
Gilbert added in the statement: "Currency, exposure to a broad mix of assets and good investment performance outweighed the net outflows the business experienced this quarter.
"There are many uncertainties out there, including the shape of the UK's future relationship with the EU, which might undermine market confidence. We remain well placed to take advantage, on behalf of our clients, of any weakness and will continue to focus on fundamentals rather than be distracted by market noise."
Before the EU referendum, Aberdeen announced profits had halved in the first half of the year. Following the vote, the firm was forced to suspend its property fund, like many of its counterparts, for one week.
Hargreaves Lansdown noted Aberdeen was stung by investors moving to leave its property funds – with £1.5bn flowing out during the three months to 30 June.
"The exodus from the property sector took its toll on Aberdeen over the last quarter, though the silver lining from the Brexit vote is that weaker sterling has helped drive an increase in the group’s assets under management," said Laith Khalaf, senior analyst at Hargreaves Lansdown.
However, he added: "For Aberdeen, outflows from the property sector are a bit of a sideshow, as withdrawals are taking place across the board. At the moment for or every £1 in assets Aberdeen is attracting, £2 is walking out of the door, and that’s not sustainable for a fund manager in the long term."