Aberdeen suffers Asian outflows as EM sentiment sours

Aberdeen Asset Management has been suffering from large net Asian outflows amid souring investor sentiment towards emerging markets, the British fund house said yesterday.

But despite haemorrhaging nearly £10 billion ($15.6 billion) in the second quarter, Aberdeen maintained that it still had faith in its Asian and EM investments.

In a trading update yesterday Aberdeen, which prides itself on its Asia expertise, announced that global AUM had fallen in the second quarter to £307.3 billion, from £330.3 as of March 31. Much of this was attributable to net outflows of £9.9 billion during the quarter as institutional investors continued to reduce their exposure to Asia and EM equities.

Commenting on the results, Aberdeen CEO Martin Gilbert admitted that a number of factors had hit fund flows in the second quarter.

“Market and FX movements together with low margin outflows from certain fixed income and solutions clients accounted for a large proportion of the decline in AUM,” Gilbert said. “In addition, macro-economic factors and investor sentiment towards Asia and emerging markets continued to weigh on equity flows.

“Despite this the long-term investment case for Asia and emerging markets is unchanged and we believe that committed investors will be rewarded over time.”

Aberdeen added that outflows were “inflated by a restructuring by a major client.”

Gross equity outflows were similar to the previous quarter but gross inflows were lower, which Aberdeen said reflected market conditions. This resulted in net outflows of £4.5 billion, compared to net outflows of £3.1 billion in the first quarter. The fund house said the outflows were mainly from Asia Pacific and global equities, in both cases largely due to withdrawals from a small number of institutional mandates, while outflows from global emerging market equities continued at a more moderate rate similar to the previous quarter.

Yesterday Aberdeen shares fell by 7.61% in London, closing at £369.1.

At a briefing in London in May this year, Gilbert admitted that the fund house’s overall performance had not been strong recently, but said he remained committed to its philosophy of investing in value stocks.

“We are performing really not well at the moment … rubbish floats in this liquidity market, so if you are a quality-driven asset manager like ourselves, you’re really going to struggle,” Gilbert told journalists at the briefing.

From the six months to the end of March, the fund manager saw net outflows of £11.3 billion, compared to £8.8 billion over the same period a year earlier.