ABERDEEN Asset Management has highlighted the prospect of continued market volatility following the Brexit vote but said it is not considering moving its headquarters from the UK in response.
The shock vote in favour of the UK leaving the European Union has sparked fears that many fund managers could relocate to cities such as Dublin to secure access to the single market.
However, Aberdeen Asset Management said the fact it already has European operations in places such as the Irish capital and in Luxembourg means it has no need to make any dramatic moves following the referendum.
Chief executive Martin Gilbert said: "There are many uncertainties out there, including the shape of the UK's future relationship with the EU, which might undermine market confidence. We remain well placed to take advantage … of any weakness and will continue to focus on fundamentals rather than be distracted by market noise."
Mr Gilbert’s comments came as the company announced that clients withdrew another £8.9 billion funds in the third quarter, net of deposits. They withdrew £16.7bn in the first half.
Finance director Bill Rattray said the company is braced for further outflows, especially from global equities funds, as the company works to rebuild its three year performance record in this area.
However, he welcomed indications that sentiment towards emerging markets has started to improve following a long period of weakness. Aberdeen Asset Management’s flagship emerging markets funds have faced big challenges amid the three year downturn in the sector.
“People are beginning post Brexit to look a little bit more at emerging markets,” said Mr Rattray who cautioned it may take time for the improvement in sentiment to result in inflows of funds.
Aberdeen Asset Management said it expects continuing volatility in UK and European equity markets as the political negotiations around Brexit proceed.
The company suspended trading in its UK property fund for a week earlier this month, amid moves by some investors to cut exposure to the asset class following the Brexit vote.
Laith Khalaf, Senior Analyst, Hargreaves Lansdown, noted that Aberdeen Asset Management saw £1.5 billion walk out of the door of its property funds in the three months to the end of June.
However, he added: “The silver lining from the Brexit vote is that weaker sterling has helped drive an increase in the group’s assets under management.”
In an update on third quarter trading, Aberdeen Asset Management noted the fall in the value of the pound against major currencies such as the dollar and the euro following the Brexit vote on 23 June increased the value of funds under management by £8.5bn in the third quarter.
The company said: “Broader equity markets have been reasonably resilient, as have other asset classes.”
It said the overall strength of markets and good investment performance had boosted funds under management by £9bn in the three months to March.
Net outflows from equities showed a small improvement on the previous quarter, to £2.9bn from £3.5bn.
Total funds under management increased to £301.4bn at 30 June, from £292.8bn at 31 March.
The company said its commitment to controlling costs and driving efficiencies is undiminished.
However, Mr Rattray said there were no plans to make any posts redundant at the firm, which employs around 500 people in Aberdeen and 250 in Edinburgh.
He said the company would consider making further acquisitions to add scale in chosen areas.
Asked if Aberdeen Asset Management had any concern that the Brexit vote could trigger a second independence referendum in Scotland, Mr Rattray said the company did not have a view one way or the other.
In February Mr Gilbert told BBC Radio’s Today programme: “Brexit will certainly put a Scottish referendum back on the table. Scotland is more pro Europe than England…and my great fear is it would inevitably lead to the break-up of the UK.”
Paul McGinnis, analyst at Shore Capital, said 2016 had seen a welcome improvement in investment performance at Aberdeen Asset Management, particularly in equities.
He added: “This will need to be sustained to turn around an extended period of underperformance."
Shares in Aberdeen Asset Management closed up 1.9p at 317.9p.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here