Aberdeen restricts inflows into Kaloo's £9bn EM range

Aberdeen Asset Management is moving to limit inflows into its EM fund range, including Devan Kaloo's £6bn Global Emerging Markets Equity and £2.7bn Emerging Markets funds.

Aberdeen has already taken action over the past few years to slow flows into the range, including closing the funds to new segregated business, capping existing segregated accounts and ending the pro-active marketing of the portfolios.

The group said it wants to avoid a total closure, to allow small investors in the funds to continue with regular monthly savings plans, but is seeking to limit inflows further.

“Flows, while they have slowed, have not done so sufficiently. So to maintain this level of long-term performance we have now got to the stage that we are exploring the possibility of closing our pooled funds to new business,” read a letter to investors.

"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 inviting in stocks of lesser quality.

"As such we are exploring ways for them to remain open but with flows significantly reduced.”

Aberdeen has asked clients to take the funds off buy lists by 1 April, and to cease promoting the range.

In response, Hargreaves Lansdown has removed the Emerging Market fund from its Wealth 150 list of recommended funds.

Senior analyst Meera Patel said: “We view the restriction of inflows as a positive move for existing investors in the fund, and do not believe investors need to take any action provided the fund still meets their objectives.”

Chelsea Financial’s managing director Darius McDermott he is “disappointed” with the move to stem inflows. “The Aberdeen Emerging Markets fund has been a firm favourite of our clients since its launch and we support their actions as they are looking after their existing investors.

"However, we are obviously disappointed new investors will not be able to invest in this fund, particularly as there is a lack of competition for decent alternatives in the sector.” He suggested the First State Global Emerging Markets Leaders fund as a possible alternative.