Aberdeen shares hit as nervous clients pull funds

Martin Gilbert of Aberdeen Asset Management. Picture: Neil Hanna

The fund manager said investor sentiment remained “fragile” in December and predicted ongoing volatility across global markets, but chief executive Martin Gilbert insisted the group was in “good shape”.

Gilbert also said that the final cost savings from last year’s £606 million acquisition of rival Scottish Widows Investment Partnership (Swip) would come in ahead of forecasts, which many City analysts had put in the region of £45m.

He said: “The broader offering acquired from Swip means that the overall business is better balanced and the enlarged business remains well capitalised and cash generative. We are confident that we remain well positioned to meet the long-term, changing needs of our investors over the coming years.”

In today’s trading update, Aberdeen said it had total assets under management of £323.3bn at the end of December, down from £324.4bn three months earlier. Net outflows for the first quarter of the firm’s financial year accelerated to £4.8bn, against the £2.8bn that clients pulled out during the previous three-month period.

It added: “As this quarter has demonstrated, investor sentiment remains fragile and we expect global markets and demand for investment products to continue to be volatile. Despite the headline net outflow, we are winning new business at good fee margins and we remain disciplined in managing costs.”

But Shore Capital analyst Paul McGinnis described the trading statement as “relatively weak”, adding that positive currency effects and gains in investment portfolios had been offset by the rise in outflows, “which continues the negative pattern experienced through all four quarters of the previous financial year”.

Aberdeen blamed the faster pace of withdrawals on a “tough” environment for emerging markets that was particularly evident in December, “as a weakening of investor sentiment to emerging markets saw a pick-up in outflows for the month”.

Gilbert said: “Despite this and ongoing concerns about Europe and elsewhere, Aberdeen is in good shape. Importantly we have a strong balance sheet, a global client base and a wide range of capabilities to meet the needs of investors.”

Aberdeen’s shares ended the day down 15.1p, or 3.4 per cent, at 425p.

The group also said that it had appointed IBM veteran Val Rahmani as a non-executive director. Rahmani, who spent 28 years at the technology giant before leaving in 2009, is also the former boss of US internet security start-up Damballa and will serve on Aberdeen’s innovation and risk committees.