Financial Advisors More Likely To Use Closed-End Funds Today Than Two Years Ago

Aberdeen Answers Investors' Calls for Closed-End Fund Awareness

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Apr 02, 2014, 10:54 ET

PHILADELPHIA, April 2, 2014 /PRNewswire/ -- While financial advisors are increasingly recommending closed-end funds to their clients, a major roadblock facing advisors is a lack of investor understanding of these investment vehicles. This finding is based on a recent survey of financial advisors conducted by Aberdeen Asset Management Inc.

Nearly seven in ten (69 percent) of financial advisors surveyed reported using closed-end funds when building client portfolios. This compares to 63 percent of advisors surveyed by Aberdeen in 2012 and just 52 percent in 2011. This represents an increase of more than 32 percent since Aberdeen began surveying advisors in 2010 about their use of closed-end funds.

"Closed-end funds are designed to help investors meet their needs whether it is income, capital appreciation, or a combination of the two," said Alan Goodson, Head of Product - U.S. for Aberdeen in the U.S. "Advisors are increasingly recognizing the potential benefits of closed-end funds; we believe, however, that among the greatest challenges to increasing investor demand for these products is a lack of knowledge and understanding of the potential benefits of closed-end fund. Aberdeen is focused on assisting advisors in explaining the possible benefits of closed-end funds to their clients in simple, jargon-free terms. We believe this is the key to building a strong, growing book of closed-end fund business."

When asked about the most common objection raised by clients when recommending closed-end funds, survey participants, by far, identified the greatest issue the lack of understanding. In fact, 70 percent of advisors surveyed cited this as the number one sales objection. Other common objections included concerns related to pricing (50 percent) and liquidity issues (45 percent).

Aberdeen's "Closed-End Funds: Easily Explained" was developed to help advisors explain the structure and potential advantages of closed-end funds to their clients. Additional information about closed-end funds, including information about Aberdeen's growing closed-end fund product lineup, is available online at www.aberdeen-asset.us/cef.

Editor's Note:

The third annual Aberdeen Asset Management Closed-End Fund Survey is designed to gather financial advisors' ideas on attitudes toward and usage of closed-end funds. The data is based on responses from more than 521 financial professionals and was administered in Fall 2013.

About Aberdeen Asset Management:

Aberdeen is an asset management group. Formed out of a management buy-out in Aberdeen, Scotland in 1983, we are now a FTSE 100 company operating on-the-ground in 25 countries across Europe, Asia and the Americas. Aberdeen Group is the largest manager of emerging market closed-end funds offered around the world by both value and number.[1]

We are defined by our focus on asset management, including equities, fixed income, property and multi-asset portfolios. Aberdeen's investment solutions are driven by our commitment to straightforward, transparent investment approaches that stress intensive, first-hand research and a long-term view.

As of December 31, 2013, we managed assets of $320.6 billion on behalf of institutional and private investors. www.aberdeen-asset.us

Closed-end funds are traded on the secondary market through one of the stock exchanges. The Fund's investment return and principal value will fluctuate so that an investor's shares may be worth more or less than the original cost. Shares of closed-end funds may trade above (a premium) or below (a discount) the net asset value (NAV) of the fund's portfolio. There is no assurance that the Fund will achieve its investment objective. Past performance does not guarantee future results.

In the United Sates, Aberdeen Asset Management (AAM) is the marketing name for the following affiliated, registered investment advisers: Aberdeen Asset Management Inc., Aberdeen Asset Managers Ltd, Aberdeen Asset Management Ltd and Aberdeen Asset Management Asia Ltd, each of which is wholly owned by Aberdeen Asset Management PLC. "Aberdeen" is a U.S. registered service mark of Aberdeen Asset Management PLC.

[1] Fund Consultants LLC, February 2014. Based on analysis of emerging market closed-end funds offered in multiple jurisdictions as of December 31, 2013; data provided by Morningstar Inc. Closed-end funds are defined as investment companies that are 1) listed on a recognized exchange; 2) possess fixed share capital; and 3) were formed via subscriptions from the public via an open offer or placement; 4) invest in listed or unlisted shares of companies and; 5) included in the universe of funds listed in Morningstar Traded Fund Center. Criteria for inclusion in the emerging markets category is based on the World Bank's definition of emerging countries as measured by lower and middle income per capita. Criteria for fund inclusion is 1) at least 75% of gross assets invested in emerging markets; 2) funds with under 25% exposure to Asian developed markets.

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SOURCE Aberdeen Asset Management Inc.