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Sterling drop boosts Aberdeen Asset Management despite net outflows

Published 25/07/2016

The exchange rate had helped bolster the investment firm's performance
The exchange rate had helped bolster the investment firm's performance

Fund group Aberdeen Asset Management said the plunge in the value of the pound following the Brexit vote helped bolster its performance despite £8.9 billion of net outflows during the third quarter.

The firm said the slide in sterling against many major currencies, coupled with "resilient markets and good investment performance", had boosted assets under management (AuM) to £301.4 billion at the end of June, up from £292.8 billion at the end of March.

It said net outflows of £8.9 billion in the nine months to June 30 were offset by an £8.5 billion jump from positive exchange rate movements and a £9 billion rise in the value of assets.

The update comes after it was one of seven property funds worth around £18 billion to suspend dealings at the beginning of July as investors attempted to cash out following the Brexit vote.

Chief executive Martin Gilbert said: "Currency, exposure to a broad mix of assets and good investment performance outweighed the net outflows the business experienced this quarter.

"There are many uncertainties out there, including the shape of the UK's future relationship with the EU, which might undermine market confidence.

"We remain well placed to take advantage, on behalf of our clients, of any weakness and will continue to focus on fundamentals rather than be distracted by market noise."

The firm said it was bracing itself for "continuing volatility" in the UK and European equity markets following Britain's vote to leave the European Union.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: "The exodus from the property sector took its toll on Aberdeen over the last quarter, though the silver lining from the Brexit vote is that weaker sterling has helped drive an increase in the group's assets under management.

"For Aberdeen outflows from the property sector are a bit of a sideshow, as withdrawals are taking place across the board. At the moment for every £1 in assets Aberdeen is attracting, £2 is walking out of the door, and that's not sustainable for a fund manager in the long term.

"The latest quarter did see some moderation in the pace of withdrawals from Aberdeen's equity funds, though it's difficult to get too excited by this when that still equates to over 3% of equity assets lost in just three months."

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