Aberdeen fund still suffering net outflows of £2m per day

Aberdeen Asset Management has revealed that the firm is still seeing net outflows of about £2m a day from its Aberdeen UK Property Fund.

In full-year results on Monday, Aberdeen reported that across its property funds the firm suffered net outflows of £0.8bn.

In addition to redemptions from the Aberdeen UK Property Fund, flows were also affected by the successful realisation of some fixed-life Nordic funds.

In a conference call with analysts following the results, chief executive Martin Gilbert added that the UK Property Fund continued to experience “small outflows”.

“On a daily basis, we probably see £2m to £3m going out of the big open-ended fund,” he said.

Aberdeen clarified later that the retail fund, valued at £3.4bn before the EU referendum, was experiencing net outflows of about £2m a day caused by investors slowly unwinding their exposure to property.

Faster sell-off than expected

In the month after the EU referendum, Aberdeen opted to sell assets faster than other fund managers in order to rebuild its cash position and restart trading again quickly, giving prospective buyers a matter of days to complete deals.

Some of the largest assets in the fund were sold including 10 Hammersmith Grove, which Brockton Capital acquired for a reported £89m.

Last week, it emerged that Brockton had flipped the office building on for £103.5m to Hong Kong-listed company Tai United.

“The gain works out to about £100,000 per day and shows the power of being a liquidity provider in a distressed (albeit temporarily) environment,” said JP Morgan analysts this week.

In its results, Aberdeen defended its handling of the redemptions that hit its retail fund by saying it was “one of only a few open-ended funds that did not close for an extended period” and that its focus had been on treating “all customers fairly”.

This week, data from the Investment Association showed property funds suffered net outflows again in October after two months of net inflows in August and September.

However, the net outflows of £276m were small compared with the net outflows of £2.3bn recorded over June and July when investors rushed to pull their money out in the wake of the EU referendum result.

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