Picture supply: Getty Pictures
It has been a superb 12 months for Aberdeen (LSE:ABDN). The Aberdeen share value is up 34% over the previous 12 months, simply outstripping the broader FTSE 250. There are lots of the reason why somebody would possibly anticipate the rally to maintain going, however right here’s one key issue that I’m unsure is getting a lot consideration.
From preservation to progress
Over the previous few years, with the pandemic, I consider many traders have targeted on defending their capital and monetary property. Due to this fact, the shares bought and the sum of money invested available in the market versus being held in money have been extra conservative. But over the course of 2025, I really feel this has shifted.
We’ve seen AI as a key theme that’s inflicting even large-cap shares to soar in worth. For instance, Nvidia is up 47% over the previous 12 months, regardless of being the most important firm by market cap. Even right here within the UK, the FTSE 100 has damaged to contemporary highs on a number of events.
If we set shares apart, commodities akin to gold have skyrocketed increased. With rates of interest being lowered within the UK, it doesn’t pay as a lot to go away cash in a money account. The underside line for me is that individuals need to make investments extra and are being extra aggressive in shopping for shares. I anticipate this development to proceed within the coming 12 months.
How this helps Aberdeen
Aberdeen is nicely positioned to benefit from this continued shift in investor sentiment. It owns Interactive Investor, which is a retail buying and selling and investing platform. It earns cash from charges and commissions, so extra exercise from shoppers will increase income.
Additional, property beneath administration (AUM) at a gaggle stage also needs to enhance, as funds look to develop their publicity to the inventory market. The agency earns administration charges as a proportion of AUM, in order each market values and inflows climb, revenues and profitability naturally enhance.
Briefly, higher investor sentiment makes Aberdeen’s core companies extra worthwhile. If it interprets to increased earnings, the share value ought to mirror the rise. In spite of everything, the price-to-earnings ratio is 13.62, which is beneath the FTSE 250 common. Due to this fact, it’s not overvalued and is unlikely, in my opinion, to endure a pointy drop solely primarily based on valuation.
Dangers to notice
Regardless of all this optimism, there are factors to recollect. For instance, the wealth administration area is turning into more and more aggressive. There are even robo-advisers to take care of! This could act to compress revenue margins because the charges charged drop as a result of traders can store round extra for one of the best value.
The asset administration business is beneath rising scrutiny, with components like ESG, disclosures, and operational resilience. Aberdeen faces increased compliance prices, and any lagging digital transformation could make cost-control tougher.
Even with this, I believe the inventory might do nicely going ahead and so I believe it’s value contemplating by traders.
