Aberdeen AM to levy 2% initial charge on global EM funds
Aberdeen Asset Management plans to implement a 2% initial charge on the £3.7 billion Aberdeen Emerging Markets Fund, the $15.5 billion Aberdeen Global – Emerging Markets Equity Fund and the $2.7 billion Aberdeen Global – Emerging Markets Smaller Companies Fund, as a further step to reduce flows into the funds.
Against a backdrop of low interest rates, institutional and retail investor interest in emerging markets remains strong, with further flows expected into the asset class, the firm said.
“As a result, despite our most recent efforts to date to slow inflows into our emerging market products, we have seen inflows pick up again. To prevent this increasing further the decision has been taken to introduce a 2% initial charge on our Global Emerging Markets pooled funds in Europe and our US domiciled mutual and commingled funds will be closed.”
The 2% charge will be paid into the fund for the benefit of all investors and not Aberdeen. The annual management charges in respect of these funds remain unchanged.
The 2% initial charge will start with effect from 11 March 2013 for the Luxembourg-domiciled Aberdeen Global Emerging Markets Equity Fund and the Aberdeen Global Emerging Markets Smaller Companies Fund, and 15 April 2013 for the UK domiciled Aberdeen Investment Funds ICVC Aberdeen Emerging Markets Fund.
The difference in dates is due to regulatory requirements, the firm explained.
John Brett, head of Distribution at Aberdeen said further inflows, if unchecked, would give rise to liquidity issues which may eventually result in the investment team being forced to compromise its investment process via the introduction of lesser quality companies.
“The team remains committed to its investment philosophy and will only introduce new stocks to the portfolio when they have been fully researched in accordance with Aberdeen’s group-wide equity process, and the team is satisfied that they meet our quality standards,” he said. “To do otherwise would not be in the best interests of investors in the funds.”