Launched in 2003, the Aberdeen Emerging Markets Fund, which won the platinum award at Portfolio Adviser’s 2012 Fund Awards yesterday, has now reached £2.7bn in size.
Over six months, one year, three years and five years the fund, run by Devan Kaloo, is ranked top quartile and over three years it is the top-performing fund in the IMA Global Emerging Markets Sector.
The letter sent to "significant investors" in the fund said: "Over the past few years we have introduced several measures to slow flows into our emerging market funds. These include closing to new segregated business, capping existing segregated accounts and ending the pro-active marketing of our pooled funds. Flows while they have slowed have not done so sufficiently.
"So to maintain this level of long-term performance for your clients we have now got to the stage that we are exploring the possibility of closing our pooled funds to new business.
"If flows continue at their current levels we are likely to encounter liquidity issues in some of our holdings and we are not prepared to compromise the quality of our portfolios by investing in stocks of lesser quality."
The letter continues that Aberdeen would prefer not to completely close the fund because it would like to allow existing small investors to continue with monthly savings plans.
So it asks larger investors, which includes Hargreaves Lansdown and Chelsea Financial Services, to cease promoting the GEM equity funds internally and to their client base.
Lack of choice
In response, Darius McDermott, managing director of Chelsea Financial Services, said: "The Aberdeen Emerging Markets Fund has been a firm favourite of our clients since its launch and we support their actions as they are looking after existing investors.
"However, we are obviously disappointed new investors will not be able to invest in this fund, particularly as there is a lack of competition for decent alternatives in the sector."
He suggests investors might look to the First State Global Emerging Markets Leaders Fund, which incidentally won the Portfolio Adviser Gold Award yesterday, as an alternative.
"While not performing quite as well as the Aberdeen fund, it is nonetheless a first quartile performer over one, three and five years, returning more than double the sector average over most of these periods."
