Aberdeen AUM drops 13% due to emerging market outflows

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Aberdeen Asset Management has seen its assets under management fall 13 per cent from £324.4bn in 2014 to £283.7bn on the back of outflows from the group’s flagship emerging markets equity funds.

The group’s results in the year to 30 September show net outflows were £33.9bn which chairman Roger Cornick attributed to “weak investor sentiment towards Asia and emerging markets” as well as expected outflows from the group’s closed life books and withdrawals by sovereign wealth funds.

The equities arm saw net outflows of £16.4bn, up from £13bn in 2014.

Cornick says: “Asian and emerging markets are undergoing a cyclical correction. Traditionally these are areas of significant strength for Aberdeen, but we have experienced outflows from some investors who have made their asset allocation decisions on the basis of their macroeconomic views on these markets.

“Our strategy is based on our conviction that these markets will recover strongly over time and our priority is to ensure that our clients continue to be well positioned to reap the long-term benefits.

“However, for some time now, the board has recognised the impact that an emerging market correction could have on our business and performance, and we have been pursuing a deliberate strategy to mitigate against this risk.

The group has been diversifying outside of emerging markets both organically and through acquisitions, such as SWIP which completed last year, with a greater focus on alternatives and multi asset propositions.

Aberdeen has also been building a cash buffer to “weather market downturns and continue to invest in the business”, Cornick says, with a cash position of £567.7m. With operating costs increasing 7 per cent to £670.3m at the end of September, the group has announced a programme to reduce annual operating costs by around £50m.

Net revenue for the year was £1,169m, 5 per cent higher than in 2014 while pre-tax underlying profit increased marginally from £490.3m to £491.6m. The final dividend was also boosted to 12p per share, up from 11.25p in 2014.

Aberdeen’s chief executive Martin Gilbert says: “The cyclical correction in Asian and emerging markets and resulting negative investor sentiment has, as expected, led to further flows from our equities business. While we believe the current weakness may have some way to run, the long-term fundamental attractions of investing in these high growth economies remain compelling for patient investors.

“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.”

Shares in Aberdeen were down 4.2 per cent at 370.20 pence this afternoon.