Europe’s Aberdeen Asset Management Takes A Hit As Investors Pull Out; Shares Fall

Aberdeen Asset Management Plc., Europe’s third-largest publicly traded money manager, said assets under management had shrunk by 13 percent this year as investors continued to pull out from the firm’s bets in Asia and other emerging markets.

The company’s stock fell 4 percent following the announcement Monday on the London Stock Exchange. Aberdeen has lost more than a billion dollars in market value this year.

Aberdeen reported 12.7 billion pounds ($19.1 billion) of net outflows in the fourth quarter, as a slowing Chinese economy and the likely hike in U.S. interest rates pushed nervous investors to back out of emerging markets this year. The company invests about a fourth of its assets in developing markets.

Performance of fund managers is usually measured by its “net fund flows” -- a sum of all the cash put in or pulled out of the firm’s investments. Net inflows create excess cash for managers to invest while outflows suggest negative investor sentiment for the money manager’s portfolio.

Aberdeen’s net outflows for the year totaled 33.9 billion pounds ($50.9 billion). Citing a “cyclical correction in Asian markets,” CEO Martin Gilbert warned Monday that “the current weakness may have some way to run ”

However, the CEO maintained that Aberdeen would continue to invest in “high growth economies” and urged investors to be patient. “It's tough times. We just need to wait for emerging markets to come back into fashion," Gilbert said on a conference call with journalists.

The outflows, led by sovereign wealth funds that seek to reduce their exposure to volatile markets, prompted Gilbert to “rule out” a sale earlier this month, after a newspaper said he had approached potential buyers, Bloomberg reported. In October, Goldman Sachs had sold its fund management unit in India to Reliance Capital Asset Management, joining a growing list of foreign fund managers streaming out of the subcontinent.

In a bid to placate pessimistic investors, the company raised its final dividend for the year by 7 percent Monday.

In the fourth quarter, the Scottish money manager reported a profit before tax of 491.6 million pounds ($738.6 million), little changed from a year earlier, while net revenue rose 5 percent to 1.17 billion pounds ($1.76 billion).