Aberdeen endures a ‘torrid’ time as investors bail out of emerging markets

Aberdeen Asset Management was hit by heavy outflows in the first half of its financial year as investors bailed out of emerging markets and said more was to come, hitting its shares.

The prospect of an interest rate rise in the United States has weighed on a number of emerging markets in recent months as many international investors pulled money amid expectations of increased market volatility in countries with large amounts of dollar-denominated debt.

While asset manager Aberdeen posted a 25 per cent rise in underlying profit to £270.2m, largely as a result of its acquisition of SWIP from Lloyds Banking Group last year, the market uncertainty saw billions yanked from its funds.

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Net outflows were £11.3bn against £8.8bn a year earlier, Aberdeen said, mostly from global emerging markets, global equities, fixed income and multi-asset funds.

Asia-Pacfic and property flows were positive, however, and positive market performance overall plus a £4bn foreign-exchange boost helped to lift total assets by 1.6 per cent to £330.6bn.

Describing the outflows as “torrid”, chief executive Martin Gilbert said there was still a lot of negative macroeconomic sentiment towards emerging markets, which is likely to weigh on performance in the short term.

Though Gilbert said he thinks a US rate rise is further away than some have suggested, he added that it would be tough for Aberdeen “until emerging markets come back into fashion”.

With the firm sitting on net cash of £550m, investors were keenly watching to see how much, if any, would be returned to them.