According to Aberdeen much of the drop in AuM from £330.6bn to £307.3bn came on the back of adverse currency and market movements, which it said “reversed much of the beneficial movements from the previous six months”.
New business also struggled as gross inflows of £9.6bn, were more than more than offset by net outflows of £19.5bn. However, Aberdeen said outflows were inflated by some restructuring by a major client and, as a result some of those assets it expects will be reinvested in the coming period.
Martin Gilbert, Aberdeen CEO said: “Market and FX movements together with low margin outflows from certain fixed income and solutions clients accounted for a large proportion of the decline in AuM. In addition, macro-economic factors and investor sentiment towards Asia and emerging markets continued to weigh on equity flows. Despite this the long term investment case for Asia and emerging markets is unchanged and we believe that committed investors will be rewarded over time.”
Comparing flows on a quarter by quarter basis, while outflows remained largely static at the firm’s Aberdeen business, inflows declined by almost 30%, which accounted for much of the net position.
In the SWIP business gross inflows were roughly flat, but outflows rose from £5bn to £6.6bn from the March 2015 to the June 2015 quarter.
Breaking it down by asset class, on the equities front, the outflows were mainly from Asia Pacific and global equities, which Aberdeen said was largely due to withdrawals from a small number of institutional mandates. Outflows from emerging market equities continued, albeit at a more moderate pace. Over the quarter, the firm’s equities funds reported £4.5bn in net outflows over the quarter.
On the fixed income side, Aberdeen said the net outflow of £1.4bn included some seasonal outflows from the SWIP liquidity funds, with the bulk of outflows in money market and UK fixed income products.
The firm’s Solutions business reported net outflows of £3.9bn, much of which were from lower margin accounts. But, the firm remains positive on the business and continues to launch funds in response to the changing pension environment in the UK.
Looking forward, it said markets remain susceptible to policy-led economic factors, although some recovery in recent weeks is noteworthy.
“Against this background, our strong balance sheet and continued discipline in managing costs provide us with resilience during a more challenging period for the company. Our focus continues to be on investing for long term returns, as we believe this is the approach which will serve our clients best.”
One the back of the numbers Numis Securities said it has downgraded its earnings forecasts for the 2015 financial year by 1%, and the next two financial years by 4%.
But, it added: “While we see today’s share price reaction is a little over-done, given that the shares were weak into numbers and management had already given a strong hint to the market recently that the numbers would be weak, we think it is too early to turn buyers.
It said there is certainly value emerging in the shares but, “given that flows look likely to remain tough for a while, the outlook for earnings is essentially flat for a couple of years, with short term risks remaining, we see no obvious reason to rush to buy today.”
