UPDATE 2-Margin boost helps Aberdeen offset outflows

Mon Dec 5, 2011 5:13am EST

Related Topics

* Assets under management fall to 169.9 bln stg

* Pretax profit 301.9 mln stg vs forecast 288-295 mln

* Final dividend 5.2 pence; shares up 5.3 pct

* Says liquidity a problem in some emerging markets

* Says expects eurozone to "muddle through", break up unlikely

By Laurence Fletcher

LONDON, Dec 5 (Reuters) - Aberdeen Asset Management shrugged off a spike in client outflows in September's volatile markets to post better than expected full-year profit, helped by demand for its higher margin Asian and emerging market bond funds.

The British-based fund manager said on Monday pretax profit rose 44 percent to 302 million pounds ($472 million) in the year to end-September, compared with forecasts for 288-295 million.

Aberdeen shares were up 5.3 percent at 214.3 pence by 0940 GMT, with the FTSE 250 index up 0.8 percent.

"They have done a good job running the business. It is a company that consistently beats expectations," Peter Lenardos, analyst at RBC Capital Markets, told Reuters.

"The market was pricing in a beat and the bar is going to be raised in future. At this point maybe it's priced for perfection, and there are companies doing as well, if not better, such as Schroders."

Aberdeen, which had seen investors pull out a net 800 million pounds in the 11 months to end-August, saw clients withdraw a further 900 million pounds in September.

However, outflows during the year were mainly from lower-margin segregated mandates, while inflows were principally into its higher-margin funds, with demand growing for its Asian fixed income and emerging market debt funds. The operating margin ticked up to 39.5 percent from 34.8 percent a year ago.

Chief Executive Martin Gilbert said flows since September had been "more of the same". However, he added that liquidity was a problem in some emerging market equity markets.

"Emerging market strategies is an area we'd like to see inflows slow down," he said on a call to journalists.

"We don't want to see tens of billions of flows into emerging markets, we want to see it in the 1-2 billion (pound) mark. We do have the capacity in Asia and Latin America, but the global product is constrained by the stocks we invest in."

Assets under management fell to 169.9 billion pounds from 178.7 billion pounds, roughly in line with analyst forecasts.

Last month fund firm Henderson said assets fell by 9 billion pounds in the three months to September as the euro zone crisis spooked clients into withdrawing more money than analysts had expected.

Gilbert also said that a break-up of the euro zone, which has come under increasing strain from several members' sovereign debt crisis, looked unlikely.

"I fall into the 'muddle through' category. I don't see any political will to break it up. I think everyone will do everything they possibly can to keep it intact," he said.

"I think (German Chancellor Angela) Merkel has done a reasonable (job) to get where she needs to go slowly. She's looking for a consensus."

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