Cash provides ballast for Aberdeen in year of outflows

Arrow down1The weak investor sentiment towards Asia and emerging markets has seen Aberdeen Asset Management’s assets under management (AUM) fall significantly over the past year, the company’s full-year results show. At September 30, AUM had fallen from £324.4 billion (€460.2 billion) to £283.7 billion after a year that saw investors withdraw a net £33.8 billion from Aberdeen, including £12.6 billion in the company’s last quarter. The firm acknowledges weak investor sentiment towards Asia and emerging markets as the main factor, as well as outflows from closed books managed for insurers. The firm has also been impacted by withdrawals by sovereign wealth funds. However, Aberdeen has a strong balance sheet with a cash position of £567.7 million, meaning the company could add to its recent string of acquisitions, or use the cash as regulatory capital. In 2015 the firm purchased FLAG Capital Management and Arden Asset Management, which will boost Aberdeen’s alternatives offering. These acquisitions helped boost the firm’s net new business by 66% to £33.9 billion. The firm’s underlying pre-tax profit was largely flat, rising slightly from £490.3 million to £491.6 million, while its dividend per share was up 8.3% to 19.5p a share. Martin Gilbert, chief executive of Aberdeen, says: “We continue to rebalance and diversify the business, to focus on managing our costs and to generate cash and this has helped to mitigate the impact of the outflows we’ve seen. We intend to continue with this strategy alongside ensuring we continue to deliver long-term value for our clients and shareholders.” Graham Spooner, investment research analyst at The Share Centre, says Aberdeen’s stock may appeal to contrarian investors due to the long-term growth prospects in emerging markets. He also says: “Investors should acknowledge that Aberdeen has been acquiring business to aid its product diversification. Its purchase of Swip [Scottish Widows Investment Partnership] has helped strengthen its position in multi-asset and alternative capabilities, while supporting diversification in its portfolio.” ©2015 funds europe

Executive Interviews

INTERVIEW: Put your money where your mouth is

Jun 10, 2016

At Kempen Capital Management, they believe portfolio managers should invest in their own funds. David Stevenson talks to Lars Dijkstra, CIO of the €42 billion manager.

EXECUTIVE INTERVIEW: ‘Volatility is the name of the game’

May 13, 2016

Axa Investment Managers chief executive officer, Andrea Rossi, talks to David Stevenson about bringing all his firm’s subsidiaries under one name and the opportunities that a difficult market...


ROUNDTABLE: Beyond the hype

Oct 13, 2016

The use of smart beta investing continues to grow. Our panel, made up of both providers and users, discusses what the strategy actually means, how it should be used and the kind of pitfalls that may arise when using this innovative investment technique.

MIFID II ROUNDTABLE: Following the direction of travel

Sep 07, 2016

Fund management firms Aberdeen and HSBC Global meet with specialist providers to speak about how the industry is evolving towards MiFID II.