Aberdeen ‘actively discourages’ emerging market inflows

The group said it was asking advisers to remove the £2.7bn Aberdeen Emerging Markets fund and the Luxembourg-domiciled $9.8bn (£6.2bn) Aberdeen Global Emerging Markets Equity fund from buy lists and recommended lists.

The measure is being launched to prevent Aberdeen having to carry out a full soft-closure of the funds - under which it would raise fees on the range to deter new investments from being made.

The drive to limit inflows and constrain the total amount of money that is managed by the emerging market team is to prevent “liquidity issues” from hampering its performance.

Aberdeen said the funds also would be closed to “larger new investors on a case by case basis”.

Darius McDermott, managing director of Chelsea Financial Services, said Aberdeen would “effectively close” the range from April 2012 because the firm has asked advisers to remove the fund from buy lists and take it out of model portfolios from the end of the first quarter.

He added that if the measures do not stem flows into the fund, Aberdeen said it would “take further measures” to limit liquidity by putting on a prohibitive charge, closing share classes and removing the funds from platforms.

“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 their existing investors. However, we are obviously disappointed that new investors won’t be able to invest in this fund, particularly as there is a lack of competition for decent alternatives in the sector,” Mr McDermott said.

In a client communication to Hargreaves Lansdown, Aberdeen said: “Over the last 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.”

But Aberdeen said: “Our preference is to not completely close the funds so as to allow existing small investors in the funds to continue with their regular monthly savings plans. As such we are exploring ways for them to remain open but with flows significantly reduced.”

The UK-domiciled fund has delivered top-quartile results over one, three and five years, returning 101.4 per cent over the five year term to January 20, compared with an IMA Global Emerging Markets sector average of 52.2 per cent, according to Morningstar.