Fund pickers cut Aberdeen Standard Investments from portfolios

Fund selectors are reassessing or excluding Aberdeen Standard Investments funds in their portfolios, as questions remain around how the investment teams will pan out post-merger.

Standard Life and Aberdeen Asset Management completed their £11bn mega-merger in August. At that time there were around 168 funds from the groups in the Investment Association sectors to be managed by around 20 teams of specialists.

Since the merger, there have been a number of exits.

In April, there were changes in key roles in the Standard Life UK equity team with some high-profile managers leaving the company.

The previous month, the merged firm announced a new structure for the leadership teams within three of its multi-asset divisions: multi-asset and macro investing, investment innovation, and client driven and multi-manager solutions.

In a recent interview with Money Marketing, Standard Life Aberdeen head of global distribution Campbell Fleming said, although the firm has seen significant outflows since the merger, it has kept all fund ratings from consultants.

Aberdeen Standard’s Nimmo: We can ride out post-Brexit storm

The firm had 43 buy ratings across the globe, with only three ratings overlapping. SLA currently has 120 Morningstar-rated funds, and has launched 17 new funds since the merger completed.

However, a number of fund selectors have been reducing their allocation to the asset manager and, in some cases, excluding new or old funds altogether.

AJ Bell fund selection head Ryan Hughes says when assessing a new fund, longevity is a key element as well as thinking about where a fund and fund manager will be three years after launch.

He says: “If I was reviewing [a new Aberdeen Standard Investment fund] I would have a question mark around it. I would have marked it down when I was marking it because of uncertainty over the corporate stability.”

When AJ Bell launched its active portfolios this year the only fund manager it picked from Aberdeen Standard Investments was Harry Nimmo and his smaller companies fund.

But in the fixed income area, Hughes excluded some products from his selection.

He says Standard Life and Aberdeen are not complementary in the bond area and he expects more disruptions in that team over the coming months.

An Aberdeen Standard Investments spokeswoman says: “The fixed income teams have been fully integrated and are working well together. Aberdeen Standard Investments now offers a deep and broad fixed income capability across developed and emerging fixed income markets that continues to see growing interest from fund selectors.”

Fundhouse managing director Andrew MacFarlane has also been advising clients to be cautious about allocating capital to Standard Life Aberdeen.

MacFarlane says: “The merger is a long process and we have seen some high-profile individuals leaving the business, which creates uncertainty for us. Examples such as David Cummings leaving last year, who was the Standard Life head of equities, and now we have just seen a restructure in the UK equity team with a couple of individuals leaving.”

“This is a natural process when two businesses merge so we do expect it. But it is the uncertainty regarding structure and people that comes with this merger that causes us to advise clients to be careful when allocating capital to the business.”

Aberdeen Standard outflows continue but platform and pensions bounce back

FundCalibre removed the Elite Rating on SLI Emerging Market Debt when emerging market debt chief Richard House left the company soon after the merger in September.

FundCalibre managing director McDermott says the team is strong but that particular fund was reliant on House’s skillset. The company still rates the Aberdeen Emerging Market Bond fund, however.

FundCalibre has also removed the Elite rating on the SLI Global Equity Income fund since fund manager Kevin Troup is retiring from the asset manager.

Fund managers Ross Mathison and Jaime Ramos Martin have also left the global equities team.

However, McDermott says he will still buy funds from Aberdeen Standard because the future looks “clearer” for it compared to the first months after the merger.

In its full-year results, published in March, SLA was still able to generate £80bn in gross inflows across the globe in 2017 despite net outflows of £31bn, with the largest portion of inflows coming through equity funds at £16bn.



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