Pressure is mounting on Europe’s largest listed fund house as a torrid period for its UK-based equity range leaves Aberdeen Asset Management facing the risk of clients voting with their feet.
Financial advisers have warned Aberdeen could face outflows after research revealed the key three-year performance numbers for most of its equity range have fallen below peer group averages.
The table shows that of the 15 Aberdeen UK-domiciled open-ended equity funds with a comparable Investment Association sector, 13 have underperformed in the past three years.
It also appears that the poor recent numbers are beginning to seep into Aberdeen funds’ long-term track records.
Ivor Harper, director at Park Financial, said Aberdeen will “almost certainly see outflows because the bulk of advisers do put so much stock in performance”.
Kevin Morgan, managing director at Consilium Financial Planning, said he had been analysing the Aberdeen funds during his portfolio reviews for clients and criticised Aberdeen for providing very little explanation behind the underperformance.
“Poor performance can be transitory and if advisers are made aware of why performance has dipped, they tend to be happy to hold on,” he said.
“But not to be told the reasons why is poor, which means advisers will vote with their feet.”
Aberdeen’s head of equities, Hugh Young, admitted performance in the past year had been “disappointing”.
Mr Young said the global equity funds had suffered in particular because they were invested “heavily in emerging markets”, which had been the “wrong theme” as developed markets had outperformed.
A lack of exposure to technology stocks also hurt. Mr Young said Aberdeen tended to avoid such businesses because “we find it hard to come up with a valuation for [them]”.
The downturn in performance could also impact the Scottish Widow Investment Partnership equity funds it acquired last year, which are now run by Aberdeen managers.
However, Mr Young said Aberdeen would not be changing its investment process in the wake of recent underperformance, insisting “the companies we invest in are generally fine; the majority are doing all the right things”.
“I realise it can wear thin if you have a year or two of underperformance but the fundamentals do eventually shine through,” he said.
Mr Harper said Aberdeen would face an “acid test” if underperformance continued.
“If outflows pick up, it will test their nerve,” he said. “They will need balls of steel to hold to their convictions as money flows out the door.”
An Aberdeen spokesperson said, in response to Mr Morgan, it aims to be “transparent and approachable” and that managers regularly meet investors. He added it “regularly looks at ways to improve” its service to clients.
