Aberdeen says fund houses must digitise

Asset managers have been going through a tough time, believes Martin Gilbert, CEO of Europe’s second largest fund house Aberdeen Asset Management, speaking on the sidelines of the annual Fund Forum industry conference, held in Berlin.

Aberdeen had a near-death experience after becoming embroiled in the split-cap investment trust mis-selling scandal of the late 1990s, bounced back to become one of the world’s top selling asset management brands, but is seeing its fortunes slipping once more due to flagging interest in its emerging markets speciality funds.

Mr Gilbert says Aberdeen is now around “half way” between its previous pinnacle and its nadir, currently managing close to £283bn ($400bn) for clients in the US, Europe and Asia. He is hoping the beginning of 2016 saw the bottom of the emerging market cycle. “There is terrific value in emerging markets, both in bonds and equities,” suggests Mr Gilbert. “The huge disparity between developed and developing markets presents a major buying opportunity, but people typically buy closer to the top.”

But he is keen to further diversify his product range, so that Aberdeen shakes off its image as the one-trick pony of old. “We were previously very dependant on emerging market, Asian and global equities,” says Mr Gilbert. 

“We want to move into and make other parts of our business bigger,” he says, referring to newer “alternative” classes including private equity, real estate and infrastructure.

Aberdeen has also frantically been cutting costs in a bid to improve efficiency. “We have been embarking on a cost-cutting efficiency drive, like most of the industry.” 

But he dismisses the idea of outsourcing more functions to back office hubs and prefers to redraw existing arrangements in favour of deepening partnerships between fund manufacturers and outsourcers.

“We already outsource, but we duplicate a lot of what our outsourcers are doing because we are spending time checking a lot of it,” says Mr Gilbert. 

Earlier this year, the group appointed Martin Jennings to the new role of head of Aberdeen Digital, a distinct fintech-style division of the company, incorporating the newly purchased Parmenion unit, which provides discretionary fund management and electronic-trading “platform” services to financial advisers.

“We in asset management need to embrace technology and become fintech companies ourselves, rather than allowing others to take our business.”