One of the funds we have been recommending to our clients for several years is Aberdeen Emerging Markets.
This fund, managed by Devan Kaloo and his global emerging markets team, has been a strong performer.
Over the past three years it has returned +40.71% compared to a sector average return of +13.63%.
Looking at the five year return, the fund is +80.52% against a sector average of +20.26%.
Although past performance is not necessarily a guide to future investment returns, it is fair to say that Kaloo and his team have been doing a great job.
Successful fund management can create some challenges.
Aberdeen Asset Management is now looking at ways it might slow down inflows to this £3.5bn fund, after recording a record net inflow of £1.7bn across the emerging markets fund franchise in the final quarter of last year.
Making a statement to the Stock Exchange, Aberdeen has said:
“Flows into our equity products have remained strong, with our Asia Pacific product having been particularly popular in the latest quarter. Net inflows to emerging market equities have continued at a higher rate than we are comfortable with and we are working to achieve a slowdown to ensure performance is not compromised.”
How might Aberdeen achieve this slow down to fund inflows?
One approach is to implement a ‘soft closure’ of the fund. This can be achieved by increasing the initial charge to investors, making an investment in the fund seem less attractive.
More likely in our opinion is a request to the big fund supermarket platforms to stop actively promoting the funds, offering their direct investors big discounts or encouraging investments in the funds on their websites and in their publications.
We will of course keep a watching brief on Aberdeen Emerging Markets, conscious that when a fund becomes too large it can become unwieldy and this can have a detrimental impact on performance.
For now, Aberdeen Emerging Markets continues to score highly in our quantitative fund research and we are confident in the ability of the manager and team to deliver the intended results in this sector.
Photo credit: Flickr/whatmeworry101
