Trend to higher margin products continues at Aberdeen

Aberdeen Asset Management increased assets under management (AuM) in July and August despite a small net outflow of funds.

AuM at the end of August stood at £184.3bn, up from £182.7bn at the end of June. The firm took in £6.1bn of new business in the first two months of the second half of 2012, but this was more than offset by withdrawals, such that the firm experienced net outflows of £0.1bn.

The firm's Equities pot saw net inflows of £2.0bn during the two month reporting period which, together with market appreciation and foreign exchange (FX) fluctuations, saw equity AuM rise to £97.1bn from £93.5bn at the end of June.

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Fixed income AuM retreated to £36.8bn from £38.1bn at the end of June as a result of net outflows £1.3bn.

The Aberdeen solutions portfolio's AuM at the end of August was £23.6bn, down from £23.8bn two months earlier. The portfolio enjoyed a £0.5bn market & FX performance increase, but this was more than offset by net outflows of £0.7bn.

The property funds' AuM declined to £18.7bn from £19.0bn at the end of June, while money market funds' AuM slipped to £8.1bn from £8.3bn two months earlier.

Gross new business flows for the first 11 months of the group's financial year stood at £33.1bn, versus £39.9bn in the corresponding period of the previous year.

Net new business showed net outflows of £0.2bn for the 11 month period (11 months to 31 August 2011: net outflow £0.8bn).

Inflows continue to be biased towards higher margin pooled products with outflows mainly from lower margin segregated mandates. Much of the money is flowing in to Aberdeen's Asia Pacific, global emerging markets and global equities products, though the group has also seen "encouraging inflows also seen into our emerging market debt capability."

By management's estimates, net flows for the July - August period will add around £10m of annualised recurring fee income.

"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," said Martin Gilbert, the Chief Executive of Aberdeen. "Our strong performance across a variety of capabilities and products means we remain well positioned to meet the needs of investors in a constantly changing environment," he added.

For analysts at Peel Hunt: "Aberdeen continues to stand out given the earnings momentum and cash generation and we increase our target price to 350p (from 300p) and retain our Buy recommendation."

JH