The stellar performance of the £3.7bn portfolio, as well as the popularity of emerging markets in general, has seen a surge of inflows into Aberdeen Emerging Markets in recent years.
According to FE data, the fund has more than trebled in size from £1.2bn in February 2010.
However, the team – headed up by Devan Kaloo – has expressed concerns over liquidity issues and has looked at methods of slowing inflows into the fund as a result.
Aberdeen has already stopped marketing the five crown-rated fund, and it has been taken off many buy-lists. However, the group has now taken the decision to implement a 2 per cent entry fee for all those looking to buy the fund for the first time.
The same charge will also be applied to the $15.5bn Aberdeen Global Emerging Markets Equity portfolio and the $2.7bn Aberdeen Global Emerging Markets Smaller Companies fund, but not until 15 April. Both have five FE Crowns.
"Further inflows, if unchecked, will give rise to liquidity issues which may in time result in the investment team being forced to compromise its investment process, resulting in the introduction of lower-quality companies," explained John Brett, head of distribution at Aberdeen.
"The team remains committed to its investment philosophy and will only introduce new stocks to the portfolio when they have been fully researched. To do otherwise would not be in the best interests of investors in the funds," he added.
Brett explains that the 2 per cent charge is for the benefit for all investors and not the group itself.
The annual management charge (AMC) for all existing investors will remain unchanged at 1.75 per cent, as will the minimum investment of £500 for new investors.
Aberdeen Emerging Markets has been the standout performer in the IMA Global Emerging Markets sector over the long-term, topping the performance tables over 10 years, with returns of 630.63 per cent.
Over the same period, its sector has returned 371.09 per cent and its MSCI Emerging Markets benchmark has made 394.03 per cent.
Performance of fund vs sector and index over 10yrs
Source: FE Analytics
As well as being a top performer, it has also been one of the least volatile funds, and it has consistently outperformed in falling markets.
In a recent interview with FE Trustnet, portfolio manager Fiona Manning (pictured) said the group believes high-quality businesses with strong balance sheets are the key to long-term success. She added that Aberdeen looks to buy these companies, which tend to perform better during market sell-offs, when they are under-appreciated by the wider market.
Aberdeen Emerging Markets is also a top-quartile performer in its sector over three and five years, with returns of 52.37 and 92.04 per cent, respectively.
Performance of fund vs sector and index over 10-yrs
| Name | 1yr returns (%) |
3yr returns (%) | 5yr returns (%) | 10yr returns (%) |
|---|---|---|---|---|
| Aberdeen Emerging Markets |
12.66 | 52.37 | 92.04 | 630.63 |
| MSCI Emerging Markets | 5.6 | 27.28 | 35.68 | 394.03 |
| IMA Global Emerging Markets | 6.32 | 25.31 | 29.03 | 371.09 |
Source: FE Analytics
The only two funds that have beaten Aberdeen Emerging Markets over five years are the two other Aberdeen portfolios set to raise their initial charges.
Aberdeen Global Emerging Markets Equity and Aberdeen Global Emerging Markets Smaller Companies have delivered 92.69 and 131.73 per cent over the period.
The next step in Aberdeen’s soft-closing process could be an increase in the minimum investment, as implemented by Trojan Income last week.