LONDON Feb 8 Aberdeen Asset Management
will impose a 2 percent initial charge on some of its emerging
markets funds, the company said on Friday, in an attempt to stem
investor flows into these large and strongly-performing
Emerging funds have seen a surge of interest in recent years
as investors hunt for yield amid weak growth in developed
markets, a search fuelled by cheap money from central banks such
as the U.S. Federal Reserve.
While fund firms earn management fees on the quantity of
assets they manage, they sometimes close funds or try to limit
investor inflows because they feel running too much money can
make the fund unwieldy and hinder performance.
Aberdeen's move to impose an additional initial charge comes
after last year's decision to soft-close the emerging market
fund, meaning it is no longer promoted to new clients.
"Despite our most recent efforts to date to slow inflows
into our emerging market products, we have seen inflows pick up
again," Aberdeen said in a statement.
"To prevent this increasing further the decision has been
taken to introduce a 2 percent initial charge on our Global
Emerging Markets pooled funds in Europe, and our U.S. domiciled
mutual and commingled funds will be closed."
According to Lipper, global emerging markets funds were the
most popular equity sector over 2012, attracting about $25
billion in net inflows during a year which saw net outflows from
all equity funds reach more than $200 billion.
Aberdeen's 3.7 billion pound ($5.81 billion) Emerging
Markets equity fund has returned 11.1 percent in the past five
years on an annualised basis compared with 3.5 percent returns
on the underlying benchmark.
The company said the charge would be imposed on this fund as
well as the $15.5 billion Aberdeen Global Emerging equity fund
and the $2.7 billion Emerging Markets Smaller Companies fund.
The firm noted that if inflows were allowed to continue
unchecked, it would give rise to "liquidity issues".
Aberdeen said its new charge would be paid into the fund for
the benefit of all investors and not Aberdeen. Annual management
charges will remain unchanged.
Emerging markets still comprise just 10 percent of the MSCI
World Index but the past decade has seen a huge pick-up in
interest in the asset class, leading to fears that steady
investor inflows could create asset bubbles.