03.16.2015
By Terry Flanagan

Aberdeen Canada Takes Global Perspective

For Aberdeen Asset Management, whose Canadian subsidiaries manage more than C$15 billion, the largest segments of its Canadian client base represent pension plans and sub-advisory relationships with some of the largest financial institutions. It also manages assets for universities, foundations and insurance companies.

“Our house style is fundamental and process-driven,” said Renee Arnold, head of business development – Canada at Aberdeen Asset Management. “Active management is the bedrock of our equity process. A similar approach characterizes currency and fixed income management, with alpha generated by identifying market inefficiencies. In property, the focus is on high risk-adjusted returns through advanced portfolio modelling and, again, active management.”

Aberdeen Asset Management is a global investment management group, managing assets for both institutional and retail clients from offices around the world. “Our mission is to deliver strong fund performance across diverse asset classes in which we believe we have a sustainable competitive edge,” said Arnold.

Listed on the London Stock Exchange, Aberdeen manages currency, fixed income and equities in segregated, closed and open-ended pooled structures. It also runs a sizable European property business.

Over two decades, it has expanded through a combination of organic growth and acquisition, first in the UK, then by seeking selectively to manage and/or market funds in countries in which it already invests.

Renee Arnold, Aberdeen Asset Management

Renee Arnold, Aberdeen Asset Management

“We operate flat management structures to facilitate local decision-making, underpinned by clear lines of control and central reporting,” said Arnold. “A central executive committee consisting of the heads of all the main business lines reports to the board of directors.”

Aberdeen offers a host of products in equities, fixed income and property and can accommodate traditional or specialty mandates in each of these classes. In Canada, many of its clients invest via its series of Canadian domiciled institutional pooled funds, predominantly in global, international and emerging markets equity mandates, and most recently in its Emerging Markets Debt Fund, where it’s gaining significant traction.

Aberdeen also has property specialists around the world which provide it with on the ground regional expertise. This may create an opportunity in the future for Canadian institutional investors looking at global real estate investments.

The core themes it’s identified are Asian urbanization, a growing middle class and governments dedicated to improvement, all of which could boost the investment landscape for emerging markets.

Asia’s middle class is experiencing rapid growth and urbanization, which Aberdeen believes could support consumer consumption rates over coming rates. GDP per capita has risen sharply across Asian countries including China, South Korea, Malaysia, Indonesia and Sri Lanka.

“Corporate and government balance sheets in Asia are holding strong, with banking, retail and housing sectors set for potential growth as the middle class strengthens,” said Arnold. “We believe Asia’s increasingly urban population could also create a need for enhanced infrastructure such as better railways and roads. This can create a robust environment for the Asian bond market.”

Japan’s corporate governance standards are improving, which Aberdeen believes can create a more stable and healthy business environment, which could then drive shareholder returns. In India, Prime Minister Narendra Modi has set an ambitious agenda with plans to increase the country’s presence on the world stage.

At Aberdeen, independence matters, and its aim is to do one thing well: asset management. From the beginning it has valued a culture of openness, mutual dependency and collective purpose.

“We are a mainly fundamental, long-only investor, wary of things we don’t understand,” said Arnold. “We can evidence the reasons behind our performance, good or bad. Our clients’ interests come first and we strive to be clear in how we communicate to them. We are positioned as a challenger to existing global asset manager brands.”

Aberdeen organizes its fund managers in teams, so every one of them has a voice. “By following investment processes that are clear, systematic and where all information is shared, we think this leads to better outcomes than if a star fund manager were in charge,” Arnold said. “We strongly believe that the combination of experienced hands and fresh minds invigorates our thinking and can lead to better performance. That’s true in every aspect of our business – not just our investment teams.”

Featured image by Comugnero Silvana/Dollar Photo Club

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