INVESTMENT CLINIC
In June 2015 I bought 500 shares in Aberdeen Asset Management for a total of £2,120.57. They were worth around 420p when I invested but since then the price has fallen to 269p. What has gone wrong? J.J, Dyfed SEEING the value of any investment tumble is always disappointing and it looks like you’ve had the misfortune to invest just as shares in Aberdeen Asset Management peaked after a strong run.
Aberdeen is an investment group which runs various trusts and funds. Its fortunes largely depend on how well those funds perform and on sentiment around the areas it is investing in.
Many of Aberdeen’s funds have a focus on such emerging markets as China and Thailand, which have been out of favour for a couple of years now.
Investors have been concerned about a slowdown in economic growth in these countries and the effect of a strong dollar on the value of the exports on which many rely.
Much of an investment firm’s income will come from the fee it charges investors to hold its funds.
If people take money out of those funds, the company’s income falls. Before you invested, the stock had been on the rise but shortly after you bought shares, their price fell after a trading update by Aberdeen. It said its assets under management had fallen from £330 bn to £307 bn as investors moved from emerging markets and foreign exchange rates worked against the funds.
Shares hit a low of 201p the following February after another £9.1 bn was pulled out of its funds and it revealed cost-cutting plans.
In the six months to March 2016, Aberdeen revealed pre-tax profits had fallen 40 pc and said plans to cut costs by £70 million a year were being implemented.
Stronger fund performance boosted the firm’s assets and saw shares make back some of their lost ground over the summer. They dipped again as full-year results showed revenue down 14 pc and pre-tax profits by around 28 pc.
This is a very brief overview of just some of the factors which have affected the firm’s share price but your question serves as an important reminder that if you’re going to put your money in a company then you should try to follow any news or announcements about the firm.
Companies should publish their financial results and major announcements on their website and you can read the City section of the Mail to follow major company news. You can get updates through the day at too.