Aberdeen Asset Management increased assets under management by 6 per cent in the three months to June 30, despite turmoil in financial markets, and identified more than £50m of cost savings to help it weather further expected turbulence.
Assets under management rose from £107.3bn at March 31 to £113.7bn at June 30, including £7.3bn of property assets from the acquisition of Goodman Property Investors at the end of May.
Excluding Goodman, Aberdeen had net inflows of £877m, compared with £474m in the first six months of its financial year.
However, redemptions continued apace, at a level about 50 per cent higher than a year earlier, as investors scaled back their appetite for risk.
Assets withdrawn by clients in the three months to June 30 totalled £4.7bn, compared with £3.1bn in the year-earlier period. This took redemptions in the nine months to June 30 to £15.1bn, compared with £10.1bn in the year-earlier period.
Martin Gilbert, chief executive, said he believed the lowest point of the credit crunch had been reached, although there would continue to be jolts to the global financial system.
“I still think we have been through the worst, but I still think there will be some shocks along the way,” he said. He expected these shocks to come from the banking sector and, possibly, from heavily indebted property funds.
However, Mr Gilbert said institutional investors now saw commercial property as an attractive asset class. “They feel it is an opportunity to allocate [funds] to property and fixed income, whereas the retail investor…that area is still fragile,” he said. “What we are seeing is it very, very slowly returning.”
Aberdeen said it had identified £57m of annual cost savings as it prepared for continuing difficult conditions, but Mr Gilbert said: “This is not a big redundancy programme. This is taking out costs that rose during the bull market phase of the stock market. It is a lot of small things that perhaps we should have done before but are now getting to grips with.”
His comments underline the challenging conditions faced by asset managers amid wild swings in equity markets, which have sparked speculation that there will be consolidation among asset managers.
Toscafund, the £3.5bn London hedge fund, has increased its stake in Aberdeen to 25 per cent, fuelling expectations of corporate activity. Mr Gilbert said Aberdeen had had “constructive conversations” with Tosca, which he described as a “very supportive” long-term holder.
Friends Provident, the embattled life assurer, is trying to sell its 53 per cent stake in separately listed fund manager F&C, but its hopes were dealt a blow last week when Dawnay Day offloaded its 20 per cent stake in F&C at a discount.
Mr Gilbert said F&C was probably trading at a “fair valuation” now, but “strategically Aberdeen and F&C would not fit together very well.”
He said Aberdeen was likely to concentrate on smaller, bolt-on deals rather than large-scale consolidation.
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