UPDATE 2-Aberdeen investment funds suffer summer slowdown

Mon Sep 24, 2012 5:29am EDT

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* Assets hit 184.3 bln stg at end-August

* Net outflows 100 million in July and August

* Clients exit lower margin, buy higher margin

By Tommy Wilkes

LONDON, Sept 24 (Reuters) - Aberdeen Asset Management reported net ouflows in the two months to the end of August, missing analysts' expectations as a strong recovery in global markets failed to persuade more clients to invest in their funds.

The fund manager, headed by Martin Gilbert as chief executive, said in a trading update on Monday clients had pulled 100 million pounds ($163 million) from its funds during the period.

While clients ploughed 2 billion pounds into equities, which tend to command higher fees, they pulled out more from its other products including fixed income and multi-asset funds.

Analysts at UBS had forecast net inflows of 200 million pounds, while at JP Morgan they had expected 100 million pounds.

Central bank action to boost flagging economies has helped spur strong gains in stock markets over the past couple of months, boosting demand for equity fund products, although jitters about the euro zone debt crisis mean clients remain nervous.

A positive performance in Aberdeen's fund range outweighed the net outflows so that assets under management rose to 184.3 billion pounds at end-August from 182.7 billion pounds two months earlier.

"We are maintaining our above consensus EPS (earnings per share) estimates as continued equity inflows and higher-margin fixed income inflows relative to business lost continue to drive improvements in revenue margins, offsetting a shortfall relative to our estimated AUM (assets under management) at end August," JP Morgan analysts said in a note.

Aberdeen said clients continued to buy into its higher-margin pooled products in the two months, including global emerging markets and global equities funds, and to exit its lower-margin segregated mandates focused on fixed income.

The shift into higher margin products will add around 10 million pounds of annualised recurring fee income, the company added.

"With uncertainty surrounding the global macro-economic situation our disciplined and fundamental approach to investing continues to attract flows from a wide range of clients from around the world," Gilbert said in the statement.

Shares in the FTSE 100 index constituent were down 0.23 percent at 307.8 pence by 0927 GMT, when the FTSE 100 was down 0.47 percent.

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