aberdeen veteran hugh young warns of soft closure

Added 30th May 2013

Singapore-based Aberdeen veteran fund manager Hugh Young has warned that a sudden $5bn inflow to its Asia Pacific strategy could force its flagship $10.3bn Sicav fund to soft close to new business.

aberdeen veteran hugh young warns of soft closure

The Luxembourg registered Aberdeen Global Asia Pacific Equity Fund is one of a stable of equivalent portfolios aimed at markets in the US, Singapore and the UK.

Speaking exclusively to International Adviser, Young said: “It’s not so much what happens to that fund alone. It’s more a matter of how much goes into the strategy as a whole. Short term we wouldn’t be keen on having $5bn flood through the door as we see things today. But markets can be very funny - there might be a calamity or something happens and then we would be saying ‘yes please’.”

But he also said inflows to the Asia Pacific funds had already slowed down this year: "It was quite hot earlier in the year, hot but manageable – a few hundred million dollars  – and that’s slowed down quite nicely, naturally."

Aberdeen has already soft closed its Global Emerging Markets Fund, in April, by introducing a 2% entry fee which goes to the existing holders of the fund rather than into the coffers of the fund management group.

“It’s quite an altruistic entry fee which has slowed the inflows dramatically in exactly the way we wanted,” Young said, pointing out that the inflows are now about flat, with inflows matching outflows.

“It was coming in in hundreds of millions a month (inflows to the emerging markets funds), and some months would have been a billion. We can manage the odd hundred here or there but if you have a flood of money coming in – these markets are not necessarily the most liquid - you then start damaging your existing investors.”

Young said the danger with inflows is that “you stop the inflows but the outflows continue so you end up not quite cutting off your nose to spite your face but it can have the reverse effect of what you intend. So it’s been about right, and hopefully our investors are happy”.

He added: “What we’ve done on the global emerging market funds is a role model for what we would do anywhere else if we had those tremendous inflows. One of the most likely areas is Asia Pacific. We are not seeing horrendous inflows but that could change tomorrow. Suddenly you have billions in and you are not being fair to investors.”

The Asia Pacific funds have been closed to new segregated business for over five years, well ahead of the soft close move on the emerging markets funds in 2013.

To read a recent profile of another veteran fund manager Mark Mobius, of Franklin Templeton, who is also based in Singapore, click here.  

To see the factsheet for the Aberdeen Global Asia Pacific Equity Fund click here.

 

 

 

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Mark Battersby

Editor, International Adviser

International Adviser

Mark Battersby is editor of International Adviser. He is also programme director for International Adviser events in strategic expat locations around the world, and its flagship FundLinks conference in London. Mark joined Last Word Media in February 2012, having previously worked at Citywire, Interactive Investor International, and FT Business.

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