Aberdeen Asset Management Plc Chief Executive Officer Martin Gilbert said investors have become too bullish on U.K. asset managers as their earnings are falling short of estimates.
“We have got into a situation where the industry has over-promised and under-delivered,” Gilbert, 59, said at a press briefing this week. “Analysts have been a bit too bullish on the sector. At one stage, we had 19 buy ratings and three holds -- you can only go one way from there.”
Henderson Group Plc became the latest U.K. asset manager to be punished by the market. The stock slumped 5.6 percent yesterday after profit missed estimates of analysts including David McCann at Numis Securities Ltd. Aberdeen, Jupiter Fund Management Plc and Schroders Plc all lost more than 4 percent last month after their earnings also fell short of expectations.
“The fund management-sector has been very easy,” said Gilbert. Companies “have hardly suffered post the crisis and they are sitting on loads of cash. It’s a high margin business. It does tend to bring in the competition.”
Aberdeen rose 0.2 percent to 409.5 pence in London trading at 12:46 p.m. Traditionally an investor in emerging markets, the company has slumped 18 percent this year, making it the worst performing asset manager on the FTSE 350 Financial Services Index. Ashmore Group Plc shares lost 17 percent in the period followed by Schroders Plc at 15 percent.
The firm had been “hammered” by outflows from developing markets earlier in the year which had yet to fully recover, said Gilbert, who co-founded Aberdeen in 1983 and bought Scottish Widows Investment Partnership last year in a bid to diversify assets. He spoke in Cowes on the Isle of Wight.
The company reported a 0.6 percent decline in assets under management to 322.5 billion pounds in the three months to June 30, it said last month. An unidentified client withdrew 4 billion pounds ($6.8 billion) in the first half of the year from its global equity and Asia Pacific funds.
The $10.4 billion Aberdeen Emerging Markets Fund rose 6.8 percent this year, better than 73 percent of peers, according to data compiled by Bloomberg. The benchmark MSCI Emerging Markets Index climbed 4.5 percent in the period. Over the past five years, the fund beat 91 percent of rivals.