Aberdeen is not for sale, says fund boss
Gilbert stands firm but client exodus sees £34bn withdrawn
THE embattled boss of Aberdeen Asset Management has insisted the emerging market specialist is not up for sale as it continued to haemorrhage money from nervous investors.
It revealed almost £34bn had been pulled out of its funds over the year, with £ 12.7bn of this coming in the three months to the end of September.
The latest exodus – even worse than City analysts predicted – was triggered by the slowdown in emerging markets, including China. Proof that Aberdeen has not managed to stem the huge outflows unnerved investors, knocking nearly 5pc off its share price.
The investment giant – which runs £283.7bn – has seen almost a third wiped off its value over the past 12 months. This has fuelled speculation that the company is looking for a buyer.
But chief executive Martin Gilbert, 60, said he was ‘upset’ by the rumours and insisted he plans to remain at the helm for the next decade, emulating his hero Sir Alex Ferguson, who managed Manchester United until he was 71.
As manager of Aberdeen football club, Ferguson won the European Cup Winners’ Cup in 1983, the same year Gilbert founded the fund manager which bears the city’s name.
of the takeover rumours, Gilbert said: ‘It’s completely untrue. It’s a great advantage to be independent. We’ve never approached anyone and won’t be doing so. We’ve not received any approaches either.’ But he could offer little reassurance to investors bruised by losses in its emerging markets funds, saying it ‘could be some time’ before they bounce back.
According to Hargreaves Lansdown, savers who invested £10,000 in its flagship Asia Pacific Equity fund at the end of September last year were sitting on a paper loss of almost £1,500 by September 30 this year. Despite the huge outflows, profits at Aberdeen dropped only slightly to £ 353.7m, from £354.6m in 2014.
Gilbert said: ‘ These are great results in a difficult year. The real challenge is the year ahead. We have to wait until emerging markets and Asian markets come back into fashion again.’
Aberdeen has already gone to great lengths to reduce its reliance on emerging markets, which have been a source of great strength for so long. It bought Scottish Widows Investment Partnership from Lloyds Banking Group for £650m just two years ago.
The deal saw it briefly overtake Schroders as Europe’s largest listed fund manager. But it slipped back into second place as the malaise in emerging markets took its toll.
The aim was to broaden the business, with SWIP more heavily focused on the UK – and particularly in corporate bonds funds, property and ‘tracker funds’ which blindly follow stock market movements. But the prospect of a hike in interest rates in the US and the UK has also caused corporate bond funds to fall out of favour. This is because the interest rates paid by corporate bonds become less attractive if returns in risk-free savings accounts improve.
Gilbert reiterated concerns about panic selling in the corporate bond market and suggested that central banks may have to intervene as ‘buyers of last resort’.