The $10.3bn Sicav received “hot but manageable” inflows earlier in the year, Young said, but these have slowed down quite nicely and naturally.
Its UK counterpart, the £2.6bn Asia-Pacific Oeic saw inflows of £400m between the end of October 2012 and the end of February this year.
Young said: “It’s not so much what happens to any one fund alone. It’s more a matter of how much goes into the strategy as a whole.
"Short term we wouldn’t be keen on having $5bn flood through the door as we see things today. But markets can be very funny – there might be a calamity or something happens and then we would be saying ‘yes please’.”
‘Altruistic fee’
Aberdeen has already soft closed its Global Emerging Markets Fund, in April, by introducing a 2% entry fee which goes to the existing holders of the fund rather than into the coffers of the fund management group.
“It’s quite an altruistic entry fee which has slowed the inflows dramatically in exactly the way we wanted,” Young said, pointing out the flows are now about flat, with inflows matching outflows.
“It was coming in in hundreds of millions a month, and some months would have seen a billion. We can manage the odd hundred here or there but if you have a flood of money coming in – these markets are not necessarily the most liquid – you then start damaging your existing investors.”
First State followed suit with the soft-closure of its GEM Leaders Fund earlier this month.
Read our analysis of the lack of alternatives for Aberdeen and First State in the GEM sector.
Fine balance
The danger with soft-closing, he explained, is that “you stop the inflows but the outflows continue so you end up not quite cutting off your nose to spite your face, but it can have the reverse effect of what you intend. So it’s been about right, and hopefully our investors are happy”.
The group’s policy for the global emerging market funds is a role model for what it would do anywhere else if it had those tremendous inflows.
“One of the most likely areas is Asia Pacific. We are not seeing horrendous inflows but that could change tomorrow. Suddenly you have billions in and you are not being fair to investors,” Young concluded.
The Asia Pacific funds have been closed to new segregated business for over five years, well ahead of the soft close move on the emerging markets funds in 2013.
