Aberdeen Asset Management’s planned merger with Standard Life will enable the money managers to compete with the “big American houses,” said Martin Gilbert, CEO of Aberdeen.
Speaking at the Pensions and Lifetime Savings Association’s annual investment conference in Edinburgh on Wednesday, Mr. Gilbert said the deal, which will create a £660 billion ($811 billion) firm, will bring the scale and full range of strategies necessary to compete in the U.S.
“We are both pretty good asset managers in our own right, and have no need to do anything. But we really felt that coming together … would give us a much broader product suite or offering for clients,” said Mr. Gilbert.
He said part of the problem for both firms “was we were both wrongly known for just being one-trick ponies,” with Standard Life known for its Global Absolute Return Strategies fund and Aberdeen for emerging markets expertise. “And this gives us the opportunity to create a world-class investment company that is capable of competing against the big American houses.” Mr. Gilbert said the deal is not “a passive vs. active move to defend against passive, but in the U.S., especially U.S. large cap, that is where we are really seeing the battleground of passive.”
While the intention is not to compete in U.S. large cap, “we would like to take our products to the U.S., and obviously to Asia and Europe, but the U.S. still has half the world’s assets under management,” he added.
On emerging markets, Mr. Gilbert said the third quarter of 2016 “looked great,” with assets flowing back into the regions, although this halted with the unexpected election of Donald Trump as president of the U.S. in November. “I think this year we will start to see some flows going back in … the great thing about emerging markets is they don’t really lend themselves to passive as much as U.S. large cap,” as they are “so inefficient.”