Emerging Markets

Top asset manager hit with $13B outflows


Aberdeen Asset Management, one of Europe's largest asset managers, has been hit with $13 billion-plus in outflows in the last three months of 2015 -- nearly twice as bad as the year before -- as emerging market volatility took its toll on the group.

Thanks to their tough end to 2015, the fund house, which specializes in emerging market- and Asia-focused funds, has suffered 11 consecutive quarters of outflows, reporting a sharp drop in its assets under management amid investor redemptions and weak markets.

Martin Gilbert, Chief Executive of Aberdeen Asset Management.
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"Like the rest of the industry we continue to contend with the structural imbalances of the global economy and the cyclical slowdown in emerging markets, as well as the impact of falling oil and commodity prices. Despite the day-to-day fluctuations in investor sentiment we remain focussed on those issues that we can control," chief executive officer of the group, Martin Gilbert said in a statement.

A trading statement covering the three months to the end of December last year published Wednesday showed the company suffered outflows of £9.1 billion ($13.04 billion) in the quarter. In the same period in 2014, the company saw net outflows of £4.8 billion.

Speaking to CNBC at the World Economic Forum in Davos last week, Gilbert told investors not to panic.

"Don't panic, that's my clear message, and don't cut at the point of maximum pain. The money in equities tends to be made the days after the really bad days, so you've just got to hold your nerve, not look at the markets and have a cup of coffee and just relax," he told CNBC.

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The slide in the oil price has forced some sovereign wealth funds from oil producing nations to de-risk, a factor which Aberdeen said has seriously dented assets under management (AUM), which now stands at £290.6 billion.

"Management (at Aberdeen) indicated that at its height, sovereign wealth funds contributed 10 percent of total AUM, which has now reduced to 2.5 percent. The company stated that despite reduced outflows in Q1/FY16 in equities (except for in global where outflows accelerated) on the prior quarter, it remains 'too early to call a halt to outflows,'" said analyst at RBC Capital Markets, Peter Lenardos in a note published Wednesday.

Credit Suisse lowered their earnings per share estimates for the group after the update.

"Aside from the market depreciation impact, the main change we have made relates to net fund outflows, which we have increased for 2016 end from £15.9 billion to £26.0 billion. This incorporates a higher run-rate of net outflows – partly due to market conditions," said research analyst at Credit Suisse, Tom Mills.

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Investors were encouraged by the report, as Aberdeen's share price climbed over 1 percent in afternoon trading have fallen over 18 percent so far this year.

Aberdeen is not the only group suffering from the fallout of a economic slowdown in China, which has triggered a wave of selling in emerging markets, rising market volatility and a slide in oil prices.

Data from the Institute of International Finance (IIF) published Wednesday showed over $24 billion has been pulled from global equity funds in the first three weeks of the year.

Equity fund outflows have been most pronounced from funds investing in U.S. stock markets, with redemptions of over $29 billion (0.7 percent of AUM) over the period, amid concern about U.S. corporate profitability.

"Retail investors have also been net sellers of EM equities for 32 consecutive weeks, with redemptions of almost $735 million per week during the first three weeks of the year. Institutional fund investors withdrew some $380 million per week from EM bond funds during the first three weeks of 2016," according to IIF.