Aberdeen says Trump victory dented investor confidence

Donald Trump's victory in the US presidential election has dented investor sentiment according to Aberdeen Asset Management, which today reported a decline in its total funds.

Donald Trump's victory saw investor sentiment stall, according to Aberdeen Asset Management. Picture: Evan Vucci/AP

The group, led by chief executive Martin Gilbert, said its assets under management fell to £302.7 billion during the three months to the end of December, down from £312.1bn for the previous quarter.

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.”

Aberdeen reported net outflows of £10.5bn for the quarter as clients pulled money out of its finds, but said this was partly offset by a £3.3bn gain on the back of market performance and foreign exchange effects.

The firm said that the bulk of the net outflows were “largely low margin and anticipated” and included two large redemptions, totalling £4.2bn, of active equity mandates from a UK wealth manager and a sovereign wealth fund.

It added: “A further £2.4bn is scheduled to be withdrawn from lower-margin portfolios during the current quarter, in addition to the normal level of structural outflows.”

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Turning to the overall decline in assets under management, Aberdeen said £2.2bn came as the result of the rationalisation of its US fixed income business to focus on credit and total return bond strategies. It expects a further reduction of about £1bn in the early part of this year.

Gilbert added: “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.”

Shore Capital analyst Paul McGinnis said Aberdeen has now racked up 15 consecutive quarters of net outflows, amounting to a total figure of £104.6bn.

He added: “We would warn investors that maintenance of the current dividend is at risk, given the annual cost of about £255m compared to surplus capital of just £60m as at September 2016 and the fact that forecast earnings are currently at a level barely above the dividend, meaning limited ability to rebuild capital.”

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