Outflows continue at AAM but Brexit vote boosts assets

● Assets rise back above £300bn mark ● Plunging pound offsets withdrawals

Aberdeen Asset Management (AAM) has continued to see investors withdraw billions from its funds but the plunge in the pound following the Brexit vote helped shore up performance in the latest quarter.

The company’s assets under management (AUM) rose to £301.4 billion at the end of June, up from £292.8bn at the end of March, helped by sterling’s fall coupled with resilient markets and improved performance.

Net outflows of £8.9bn in the nine months to 30 June were offset by an £8.5bn jump from positive exchange rate movements and a £9bn rise in the value of assets, the firm said in a trading update.

Withdrawals from the property sector represented the largest outflows as a percentage of assets under management. Aberdeen had suspended dealings in its property fund at one stage as a rush of investors attempted to cash out following the Brexit vote.

Although the long term economic impact of Brexit remains unclear, finance director Bill Rattray told The Scotsman that in terms of AAM’S operations he doesn’t see any major changes.

“We have a well-established structure in Luxembourg which will enable us to still sell into the EU and a strong business in the UK,” he said.

Chief executive Martin Gilbert said the shape of the UK’S future relationship with the Euwasoneofmanyuncertainties which might undermine market confidence but he added: “We remain well placed to take advantage, on behalf of our clients, of any weakness and will continue to focus on fundamentals rather than be distracted by market noise.”

The firm said it was bracing itself for “continuing volatility” in the UK and European equity markets following Britain’s vote to leave the European Union.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “The exodus from the property sector took its toll on Aberdeen over the last quarter, though the silver lining from the Brexit vote is that weaker sterling has helped drive an increase in the group’s assets under management.”

But he said that the wider challenge for AAM was the continuing outflows being seen by the group.

“At the moment for every £1 in assets Aberdeen is attracting, £2 is walking out of the door, and that’s not sustainable for a fund manager in the long term.

“The latest quarter did see some moderation in the pace of withdrawals from Aberdeen’s equity funds, though it’s difficult to get too excited by this when that still equates to over 3 per cent of equity assets lost in just three months.”

Paul Mcginnis of Shore Capital, which has a sell rating on the shares that have gained 50 per cent since February, said: “While 2016 has seen a welcome improvement in investment performance, particularly in equities, this will need to be sustained to turn around an extended period of underperformance.” Shares in AAM closed up 1.9p at 319.9p.