Aberdeen to stem flows into Kaloo's £9bn GEM range

Aberdeen Asset Management is stemming flows into some of its Global Emerging Markets funds run by Citywire A-rated Devan Kaloo, in a move to prevent  soft-closing the funds.

The funds include the $9.8 billion (£6 billion) Luxembourg-domiciled Aberdeen Global Emerging Markets Equity fund and the £2.7 billion UK-domiciled and Citywire Selection Star pick Aberdeen Emerging Markets fund, both run by Devan Kaloo and his team.

The firm has introduced several measures in attempt slow flows into its emerging markets funds, by closing them to new segregated business, capping existing segregated accounts and ending pro-active marketing of their pooled funds.

However, the firm said: ‘If flows continue at their current levels we are likely to encounter liquidity issues in some of our holdings and we are not prepared to compromise the quality of our portfolios by investing in stocks of lesser quality.’

The firm added: ‘Our preference is to not completely close the funds so as to allow existing small investors in the funds to continue with their regular monthly savings plans, etc. As such we are exploring ways for them to remain open but with flows significantly reduced.’

Aberdeen is asking brokers to cease promoting the funds internally and to their client base. It is also calling on them to remove the funds from their buy lists by no later than the start of April.

The Aberdeen Emerging Markets returned 87.49% versus the MSCI EM Total Return 61.53% over three years to the end of December.

The Aberdeen Global Emerging Markets Equity fund delivered 86.96% over three years to the end of December versus the MSCI EM Emerging Markets Total Return index, which returned 61.53%

Aberdeen is the latest big emerging market group to restrict inflows into its range after First State soft closed five emerging markets funds last October, including Martin Lau's Greater China Growth fund.