A new fund management company — Standard Life Aberdeen — will emerge next week. Its joint CEO Martin Gilbert offers Lipper Alpha Insight an overview of the challenges and opportunities facing the firm.
The creation of Britain’s biggest listed asset manager, and one of the world’s top 25 active fund management companies, follows a March merger deal worth US$14.5 billion between Aberdeen Asset Management and Standard Life.
These two giants of Scotland’s financial services industry are forming a business with recurring fee revenues close to $4 billion and a joint workforce of nearly 10,000 in more than 50 countries.
Click the image to hear the full interview from Martin Gilbert.
At the time the deal was announced, they had combined assets under management in excess of $750 billion.
In this wide-ranging interview, he discusses plans for the minimization of team disruption, the appointment of key executives and the expected contributions to profit from revenues and cost cutting.
Smart beta approach
The merger comes as traditional fund management businesses are squeezed by the market share growth of “passive” index-linked funds.
Gilbert said the combined business had no plans to launch ETFs but that it will compete in smart beta, where “both firms are very positive and looking to grow.”
Smart beta is a set of rules based investment strategies which are designing to deliver diversification and risk-adjusted returns above cap-weighted indices by using alternative weighted schemes based on other factors.
Aberdeen recently launched its first smart beta fund offering exposure to five targeted risk premia factors: value, quality, momentum, small size and low volatility.
It described smart beta as a “sophisticated” third approach to investing that combines the benefits of both active and passive management.
On future expansion, Gilbert admitted that significant acquisitions were unlikely over the next few years while the merger is digested.
However, he spoke positively about the combined group’s potential in markets such as Australia, which is the world’s fourth largest and somewhere that Aberdeen may have under-performed in the past.
He added: “One of the great things about this merger is that there was no huge amount of overlap. We are strong in emerging markets equities, global equities and Asian equities, while Standard Life is a world leader in multi-assets.
“The businesses were very complementary and it’s made it an easier merger than most in the fund management business.”