Aberdeen sticks to strategy after heavy outflows, shares dive

By Carolyn Cohn

LONDON (Reuters) - Aberdeen Asset Management (ADN.L) will retain its emerging markets focus after investors withdrew almost 10 billion pounds over the past three months, Chief Executive Martin Gilbert said on Thursday.

Aberdeen's shares dropped more than 6 percent and were the worst performer on the FTSE 100 index (.FTSE) after the money manager suffered a ninth consecutive quarter of fund outflows.

Expectations of a U.S. rate rise later this year are denting investor appetite for high-yielding but risky emerging market assets. The closely-watched MSCI emerging market index (.MSCIEF) has fallen 3 percent this year, and 5 percent since end-March.

"We are long-term boring investors buying quality companies, and that doesn't work in the momentum-driven liquidity market that we're in," Gilbert told Reuters by phone.

"We won't change our investment style, so we need to ride this out, it's painful."

The withdrawals -- totalling 9.9 billion pounds in the three months to the end of June -- came as institutional investors cut exposure to Asia and emerging market equities. Assets under management (AUM) fell 7 percent to 307.3 billion pounds.

Gilbert said a U.S. rate rise sooner rather than later could restore confidence in emerging markets.

Aberdeen funds had partly underperformed because of their lack of exposure to a rally in Chinese stocks (.SSEC) earlier this year, Gilbert said. But this meant they had also avoided the rout in China which started in June and deepened this month.

Aberdeen's purchase last year of Scottish Widows Investment Partnership from Lloyds (LLOY.L) for about 660 million pounds has cut some of its reliance on emerging markets.

Gilbert said Aberdeen still planned a share buyback of up to 100 million pounds this year, announced in May.

"We would rather buy the shares at a cheaper level than at a higher level."

Aberdeen's shares were trading at 373.1 pence at 1015 GMT, down 6.6 percent on the day and their lowest since March 2014.

Analysts at RBC reiterated their underperform rating on the stock, saying net outflows of 21.2 billion pounds for the nine months of Aberdeen's financial year had already exceeded their forecast of 19.4 billion for the full year.

(Reporting by Carolyn Cohn; Editing by Sinead Cruise and Keith Weir)