Philosophy and Process
We pride ourselves on original thinking and research. We also believe strongly in portfolio transparency. Implicit in our style is a rejection of commoditised products and closet indexing; our business therefore stands or falls on whether we can genuinely add value to client wealth.
We operate as an independent company, free of the conflicts of interest that can affect integrated financial groups. Although we are publicly quoted, management and staff are significant owners of the business. Fund management is all that we do.
We have distinctive CURRENCY & FIXED INCOME, EQUITY and PROPERTY processes.
CURRENCY & FIXED INCOME
The Aberdeen currency and fixed income process dates back to the late 1980s. The process is based on the following core values: a focus on proprietary research, identifying investment opportunities with attractive risk-reward characteristics, combining multiple non-correlated investment decisions with risk monitoring, and management & control at all stages of the investment process. Our global client base invests in a range of local, global and specialist currency and fixed income and multi-alpha strategies.
Main Strengths
Active management: Our aim is to add value by exploiting market inefficiencies in the areas of relative value, credit, interest rate and currency management. These sources of added value are combined to construct appropriate investment strategies that meet individual clients’ return and risk objectives across a variety of local, global and specialist benchmarks and liability profiles. Solutions can be delivered for both constrained and unconstrained mandates. By creating small teams focused on specialist areas, we have established an investment process and structure which is adaptable to a wide and changing set of client requirements. Our use of derivatives allows us to separate sources of risk and return, and construct funded or unfunded investment strategies.
Proprietary research and idea generation: We have dedicated portfolio managers and analysts in three major time zones, with a particular emphasis on relative value and credit, including high yield and emerging debt. Our macro-driven investment teams (interest rate and currency) benefit from local market contact with investors, policy makers and economists.
Portfolio management: Our aim is to blend individual investment decisions into a fully diversified local, global or specialist portfolio with attractive risk-return characteristics. Flexibility towards client needs and an ability to meet changing market requirements - such as Liability Driven Investment - is essential. We work closely with clients on performance objectives, guidelines and benchmarks.
Team approach: We employ over 75 investment professionals based globally and arranged in small specialist teams. These teams combine to create tailored investment portfolios capturing our best investment ideas. Our investors work in an independent, transparent and accountable investment structure and their interests are aligned to those of the business as shareholders of Aberdeen Asset Management PLC.
EQUITIES
The Aberdeen equity process dates from the early 1990s. The process is continuously evolving but its central tenets are an emphasis on original research, the identification of businesses that we can understand and the elimination of downside risks through price disciplines. While it originated in Asia, our approach works equally in developed markets, since fundamentals drive returns over the long term.
Main strengths:
Active management: Our aim is to add value by identifying good quality securities, defined chiefly in terms of management and business model, which are attractively priced. Stock selection is the key source of equity alpha. We downplay benchmarks in portfolio construction since these provide little clue to future performance.
Proprietary research: Our equity managers always visit companies before investing, making thousands of visits annually to existing and prospective holdings. Every contact is documented in detail. If a security fails our screens, we will not own it, irrespective of its index weight.
Long-term focus: Strategies are simple: buy-and-hold; add on the dips; take profits on price run-ups. This reduces transaction costs and keeps portfolios focused. We rarely focus on short-term returns.
Team approach: We employ over 58 investment professionals based globally. Portfolio decisions are made collectively, and we avoid cultivating ‘star’ managers. Cross-coverage of securities also increases objectivity and lessens reliance on individuals.
PROPERTY
Aberdeen’s approach to property investments is to generate superior returns to our investors through better understanding of the dynamics of property markets and realise the potential of individual property assets. A structured investment management process, underpinned by best-in-class research of the European property markets, has delivered consistent outperformance tailor made for our clients through a comprehensive range of investment vehicles and mandates.
Main strengths:
Active management: For property, we believe the role of active management is essential in generating excess returns. We focus on hands-on active management in portfolio modelling, asset and property management to increase risk-adjusted returns.
Local presence: With some 500 employees at offices across Europe, Aberdeen has an unrivalled reach of active local management for successful cross border property investments.
Structured investment process: The principle is to combine an advanced top down approach with a pragmatic but structured bottom up approach. The former focuses on active managment, the latter on managing portfolio risk (beta).
Risk adjusted returns: This concept is central in assisting institutional investors to gain well diversified property exposure. With advanced portfolio modelling, we provide an understanding of the risk of different property investments and their place in multi-asset structures.