Summer storm hits AAM as wary clients withdraw £800m from funds

Clients of Aberdeen Asset Management (AAM) withdrew £800 million from its funds during the stormy months of July and August, as fears over the state of the global economy hit demand for fixed income and alternative products.

Assets under management at the firm fell 4.7 per cent to £176.9 billion in the 11 months to the end of August, with analysts warning that its assets would have been reduced further in September as the eurozone debt crisis which triggered the falls continued unabated.

Adverse market conditions reduced the value of assets by £8.1bn in the 11 months to the end of August.

The exit of funds represents the first net outflow AAM has reported since the first quarter of 2011. Nevertheless, it hailed a “robust” performance across its core equities capabilities, and confirmed it is expected to push profit for the full financial year to the top end of analysts’ forecast range to as much as £297m.

The FTSE 250 asset manager said it was not a surprise that gross inflows slowed in the choppy markets, to £6.1bn in the two months. Net inflows in the previous three months to 30 June had been £10.9bn.

AAM, whose portfolios are weighted towards the Asia-Pacific region, added that clients put £300m into its equity fund range during the period, buying global emerging market and global equities strategies to offset weaker stock markets in Europe and the UK.

Martin Gilbert, chief executive, said the performance was resilient but warned that uncertainty would continue to plague markets.

“Given the economic backdrop in Europe and the US and heightened market volatility during the last two months, Aberdeen’s new business flows have been resilient,” he said.

“We have seen a continuation of the trend into our higher margin pooled funds. Importantly, investment performance has also been robust, during a period of macro-economic uncertainty. This bears testament to the merits of our conservative approach and the quality of our investment teams around the world.

“There is no easy resolution to Europe’s sovereign debt problems and the expectation is for anaemic economic growth in the West for some time.”

Mark Williamson, an analyst at Peel Hunt, said that despite the falls in asset under management the “attractions of AAM remain very much intact”.

He said: “The group benefits from a diverse asset base, a strong global distribution platform, little reliance on performance fees and an increasingly strong balance sheet with year end net cash likely to amount to £137m.”

Williamson also noted that the firm’s “attractions are enhanced further” by its 4.7 per cent yield as investors moved cash into the group’s higher-margin pooled funds.

“Aberdeen remains our top pick amongst the conventional asset managers,” said Williamson.

Analysts at Oriel said in a note: “Aberdeen is arguably better positioned than other asset managers because of its expertise in emerging markets – as can be seen in the 11-month inflows into higher margin equities.

The firm will announce its full-year results on 5 December. Shares rose 1.5p to close at 170p last night.