Aberdeen Asset Management has suffered a fall out of “fashion” as the investment giant revealed it had racked up £9.9billion in net outflows.
The biggest publicly listed investment company in Europe was hit by a slump of more than 8% of the value of its shares by midday, adding to the firm’s woes.
Clients pulled out £19.5billion in the torrid three months to the end of June, while assets under management slumped £23billion – 7% – to £307.3billion in the same period, which Aberdeen said was also due to currency effects and “market conditions”.
In a statement, the firm also said the quarterly outflow was “inflated” by the restructuring by a “major client”. It added: “We expect some of these assets to be reinvested in the coming period.”
“It’s pretty tough at the moment, admitted chief executive Martin Gilbert.
“It’s not nice watching all this money going out.”
The firm’s exposure to Asian and emerging markets, led by Hugh Young, the managing director of the firm’s Asia business and who oversees around £140billion of assets, played a significant role in investor sentiment.
Since June Chinese stock markets have been hit by a crisis of unprecedented volatility prompting the Chinese government to relax lending rules.
But Mr Gilbert affirmed the company’s long term outlook on the region.
“I’m a long term believer in Asia as is Hugh Young, as is Devan Kaloo who runs equities.
“We are all positive long term on companies there. They have good fundamentals, they are well run. I’m still happy on the long term outlook.
“In the meantime all we can do is control what we can control which is costs and margin, and just keep our heads down and do the best we can for clients.”
Mr Gilbert added that the firm’s cost controls would not be “drastic – all we are doing is basic housekeeping,” he said.
“Our style is out of fashion at the moment,” he said.
“Liquidity-driven markets don’t suit us.
“We have just got to wait until reality returns and people love emerging markets again.”
Garry White, the chief investment commentator for stockbrokers Charles Stanley, said:“Emerging countries have disappointed in terms of growth rates. Funds have also been repatriated from these markets during times of crisis, which prompted a flight to perceived safety in western markets.”
Approximately a third of Aberdeen’s total assets under management is in equities, 22% in fixed income, 39% in Aberdeen Solutions, which offers multi-asset and alternative investments, with 6% in property.