Aberdeen Asset Management stems outflows after Brexit vote

Aberdeen Asset Management Scottish Open - Day Four
Chief exec Martin Gilbert political events had "weighed on investor sentiment" (Source: Getty)

Aberdeen Asset Management jumped over four per cent despite revealing full-year double-digit percentage falls in revenue and profits.

Net outflows from its funds totalled £33bn, in what the firm called a "tough" year.

The figures

Net revenue totalled £1.0bn, down from £1.2bn in the previous year. Underlying profit before tax fell by 28 per cent to £353m.

While earnings per share flopped from 30.0p to 20.7p, Aberdeen said its dividend would be in line with the previous year of 12p per share.

Despite the net outflows, assets under management grew from £284bn to £312bn.

Read more: Aberdeen Asset Management told to boost its minimum financial cushion

Why it's interesting

Many fund managers have blamed Brexit on investors pulling funds. Property funds were forced to prevent redemptions earlier this year following concerns of a run on them.

Read more: UK asset manager pulls bid for UniCredit's unaffordable €3.5bn fund unit

However, Aberdeen's outflows have been pretty steady throughout the year. On a net basis, more funds were withdrawn in the first half the year than the second.

Net fund withdrawals were at their lowest in the three months that followed the Brexit vote.

Three months to: 31 Dec 2015 31 Mar 2016 30 June 2016 30 Sept 2016 Total
Inflows £10.9bn £10.5bn £9.2bn £8.4bn £39.0bn
Outflows £20.0bn £18.2bn £18.1bn £15.5bn £71.8bn
Net £9.1bn £7.6bn £8.9bn £7.2bn £32.8bn

Despite the fall in profits, investors reacted positively to the annual results, especially on the news that the dividend would be maintained.

Analysts at Cenkos said: "A year ago we warned that Aberdeen would face a tough year and it has done so, but it has faced those difficult conditions with considerable resilience and, importantly, shareholders have seen a maintained dividend at 19.5p per share declared, a yield of 6.8 per cent."

What the company said

Chief executive Martin Gilbert told City A.M. there are many headwinds currently facing the fund management industry.

Asked how the business would change in 2017, he said: I think it’s just about managing the business more efficiently.”

“I think it’s going to be tough times for the industry. And we just have to manage our businesses more efficiently. By that I mean look at how we do things. Fund managers tend to have a lot of manual processes.”

He added that this does not necessarily mean cost-cutting. “We’re just very manual in the way we go about things,” he said.

“The more we can automate things, the more we can do things straight through processing and take out the manual intervention, the less scope there is for error. If there are errors, that costs you money, you’ve got to rectify it. So it’s more about that than anything else.”

Aberdeen's chairman Simon Troughton pointed to key events as driving the volatility of global markets.

Future political and economic events, including the UK's negotiations to exit the EU, the start of President-elect Trump's term in office and European elections, will contribute to ongoing volatility in global markets in the short term.

However, until there is greater clarity, it is difficult to predict the impact on markets over the medium and longer term.

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