Number of top quartile funds has fallen from 54% to 5% in the two years to 31 october 2001
The percentage of Aberdeen Asset Management's unit trusts occupying a 12 month top quartile ranking has fallen from 27% last year to just 8% for performance over the 12 months to 31 October.
Over the two year period to that date the underperformance has been even more marked with the proportion of top quartile funds having fallen from 54% to just 5%, according to research from SchroderSalomonSmithBarney (SSSB).
SSSB UK analyst Carolyn Dorrett said: 'The investment performance of Aberdeen's UK unit trusts has deteriorated over the 12 months to 31 October 2001. The funds are biased towards a growth style of investment, due in part to the relatively heavy weighting in technology stocks within fund portfolios. With a value investment style having outperformed growth for the past 15 months, this has negatively impacted Aberdeen's investment performance.'
Its largest unit trust, the £1.22bn Aberdeen Fixed Interest fund, managed by Paul Reed, has retained its top quartile ranking over a three year period. In the three years to 1 November the portfolio, which is in the UK Other Bond sector, has returned 16.7% on an offer to bid basis against a sector average of 9.03%.
Dorrett said: 'Aberdeen's deterioration in investment performance over the past year, coupled with the negative impact on its reputation from the problematic split capital investment trust sector, is expected to result in the group winning a smaller proportion of new inflows into the UK unit trust sector in 2002.'
The research follows the publication of Aberdeen's report and accounts which showed a jump in profit margin, largely produced by Aberdeen's move to diversify its asset base with property having grown to a fifth of assets under management.
The increased property base reduces the group's reliance on management fees from equities, an income stream that has suffered as split capital trust and technology assets have fallen in value dramatically, two areas in which Aberdeen is considered a leading house.
Its profits before tax rose by 37% to £48.2m while funds under management rose to £34.7bn. That represents a 58.4% rise from the end of September 2000 when funds under management stood at £21.9bn.
Dorrett said: 'A vast proportion of this increase in funds under management was due to acquisitions, which increased Aberdeen's funds under management by £17.1bn during the financial year 2001. If these acquisitions were excluded, Aberdeen's total funds under management would actually have declined by 19.6% during the year, due to the impact of falling equities markets.'
Aberdeen's aggressive acquisition strategy is important as it is due to lose control of around £8bn of assets it manages for Scottish Provident, funds that will move to Abbey National next year.
Important in Aberdeen's new asset mix is the rise in the proportion of property assets from 4% of total funds under management to 20%, largely due to the purchase of Barclays Property and Celexa.
The proportion of assets invested in equities has fallen to 49% with 31% in fixed interest and cash. UK equities represented 36% of assets under management on 30 September 2000. By 30 September 2001 that had fallen to 29%.
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