Aberdeen’s assets fall £9.4bn to £302.7bn

Martin Gilbert

Shares of Aberdeen Asset Management fell almost 5% after it said its assets under management fell about £9.4 billion to £302.7 billion in the three months to December 31 and it warned more outflows may follow soon with “significant withdrawals by a small number of clients.”

The firm said a further £2.4 billion is scheduled to be withdrawn “from lower-margin portfolios” during the current quarter in addition to the normal level of “structural outflows.”

Aberdeen shares were trading down 4.9% at about 246p, giving the firm a current stock market value of roughly £3.3 billion.

Aberdeen said net outflows were £10.5 billion in the quarter, partly offset by £3.3 billion in asset appreciation, but the bulk of net outflows “were largely low margin and anticipated.”

It said £2.2 billion of the reduction in assets was due to rationalisation of its US fixed income business.

Aberdeen CEO Martin Gilbert said: “Investor sentiment had been improving steadily in the early part of the quarter, but stalled following the US presidential election result with investors putting asset allocation decisions on hold.

“Encouragingly, despite the market volatility our equity strategies produced strong returns for the year.

“While growing interest in a number of our strategies is likely to continue to be masked, in the short-term, by significant withdrawals by a small number of clients, I am encouraged by the progress being made.

“Overall Aberdeen remains in good shape, we have a strong balance sheet, a global client base and wide range of capabilities to meet the needs of investors.” 

Aberdeen said gross inflows during the quarter were £10.2 billion, compared to £8.4 billion in the quarter to September 30, 2016.

“The bulk of the net outflows were lower margin and included the two large redemptions (£4.2 billion) of active equity mandates from a UK wealth manager and a Sovereign Wealth Fund that we reported in our 2016 results announcement, as well as anticipated structural outflows from certain  institutional clients,” said Aberdeen.

“We continue to make encouraging progress across all asset classes, with a healthy level of client interest and demand.

“In particular, we are beginning to see traction for our multi-asset strategies, as illustrated by the proposed transfer of a closed-end fund mandate to be managed by Aberdeen’s diversified multi-asset team. 

“Our core equity strategies have produced strong performance against their respective benchmarks in 2016, with performance particularly strong in the period before the US election result, while our fixed income strategies continued to produce solid returns.”