Currency trading softens Brexit blow at Aberdeen but Alliance Trust underperforms

According to the assets manager’s half year results, the total shareholder return of 2.6 per cent and Net Asset Value (NAV) – the value of assets minus the value of liabilities – of 6.6 per cent was below the trust’s benchmark return of 12 per cent.

The poor results come as fellow Scottish wealth manager, Aberdeen Asset Management, revealed today that post-brexit currency volatility had allowed it to offset the effects of £8.9bn of net outflows during the past quarter, including £1.5bn coming out of its property funds as a result of the referendum’s outcome.

In a trading update, Aberdeen said it had suffered the largest net outflows from its equities division, with £2.9bn leaving the strategies.

Multi-asset followed with £1.7bn of net outflows in the three months to the end of June, while property products saw £1.5bn of net outflows.

However, the asset manager offset the losses with £9bn of market and performance gains as it profited from weakened sterling post-Brexit, with £8.5bn of gains from exchange rate movements in the quarter.

Total asset rose in the quarter, from £292.8bn at the end of March to £301.4bn at the end of June.

Aberdeen chief executive Martin Gilbert, said: “Currency, exposure to a broad mix of assets and good investment performance outweighed the net outflows the business experienced this quarter.

“There are many uncertainties out there, including the shape of the UK’s future relationship with the EU, which might undermine market confidence. We remain well placed to take advantage, on behalf of our clients, of any weakness and will continue to focus on fundamentals rather than be distracted by market noise.”

Meanwhile, net inflows at Alliance Trust Investments were £25m while assets under administration at platform Alliance Trust Savings rose around 40 per cent, from £8.5bn in January 2016 to £12bn at the end of June.

But June was still a month of underperformance as the Brexit vote, a pension scheme buy-in and debt valuations hit returns.

The trust’s share price rose to a high of 524p as at the six months ended June 30, compared to 484p per share during the same time last year.

Chairman Lord Smith of Kelvin said: “In volatile markets we continue to make good progress against the initiatives outlined last year to enhance shareholder value.

“Costs are coming down, ATI and ATS are making good strides towards profitability, and a fully non-executive Board is in place.”

He added: “Investment performance in the period underperformed the benchmark, reflecting the turbulent market conditions around the EU referendum when the Trust’s quoted equity portfolio gave up the outperformance it had recorded over the prior five months.

“However, since the period end Alliance Trust’s share price has reached new highs.”

June also saw takeover talks collapse after Alliance Trust was approached by Lord Rothschild-backed RIT Capital Partners.

The firm said: “We told our shareholders at the time that we would consider any proposal as part of the Group strategic review that we had already initiated. This review is ongoing and includes a broad range of possible courses of action. We are making good progress and intend to report on the outcome of our review later in the year.”