PA ANALYSIS: Diversity the watchword as fund groups battle Brexit

Added 28th July 2016

Praise for diversification was the refrain ringing out from the earnings reports of the UK’s major listed asset managers as Brexit-fuelled uncertainty pummeled AUM.

PA ANALYSIS: Diversity the watchword as fund groups battle Brexit

The period under discussion for Henderson Global Investors, Schroders, Jupiter and Aberdeen Investment Management was dominated by Brexit-fuelled uncertainty that saw investors at best hold positions steady and, at worst sell out significantly from European assets.

In the case of Henderson and Aberdeen, this uncertainty was exacerbated by the capitulation of the UK commercial property sector wherein both are significant players and whose funds suffered sharp redemptions and were suspended.

While the numbers for Aberdeen are not directly comparable to the other three as it reported a trading update for the nine months, as opposed to half year results to the end of June like the others, the sentiments expressed by CEO, Martin Gilbert’s are decidedly similar.

"We continue to benefit from the diversified asset and client base of the business. Currency, exposure to a broad mix of assets and good investment performance outweighed the net outflows the business experienced this quarter,” he said, before adding: “There are many uncertainties out there, including the shape of the UK's future relationship with the EU, which might undermine market confidence.”

However, he was quick to add, like the others that Aberdeen remains well placed to take advantage of the opportunities the uncertainty throws up. As to why all four are confident in their ability to weather the storm of uncertainty currently raging within global markets, their answer is diversification.

"The trick for all four managers is going to be ensuring that the funds that remain in demand outperform."

In the case of Henderson and Jupiter, the firms are actively pursuing geographic diversification strategies, while Schroders and Aberdeen continue to expand their existing footprints and have targets for greater diversity of AUM.

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Geoff Candy

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Geoff Candy joined Portfolio Adviser as News Editor in May 2014. He has been a financial journalist and broadcaster since 2005 and, in that time has worked in both South Africa and the Netherlands, covering everything from high street retailers and construction companies to mining and insurance.

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