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It has been a superb 12 months for Aberdeen (LSE:ABDN). The Aberdeen share worth is up 34% over the previous 12 months, simply outstripping the broader FTSE 250. There are a lot of explanation why somebody may 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. Subsequently, the shares bought and the amount of cash invested available in the market versus being held in money had 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 biggest firm by market cap. Even right here within the UK, the FTSE 100 has damaged to recent highs on a number of events.
If we set shares apart, commodities similar to gold have skyrocketed greater. With rates of interest being lowered within the UK, it doesn’t pay as a lot to depart cash in a money account. The underside line for me is that folks need to make investments extra and are being extra aggressive in shopping for shares. I anticipate this pattern to proceed within the coming 12 months.
How this helps Aberdeen
Aberdeen is effectively positioned to make the most of 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 enhance income.
Additional, property below 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 share of AUM, in order each market values and inflows climb, revenues and profitability naturally enhance.
In brief, higher investor sentiment makes Aberdeen’s core companies extra worthwhile. If it interprets to greater earnings, the share worth ought to mirror the rise. In any case, the price-to-earnings ratio is 13.62, which is beneath the FTSE 250 common. Subsequently, 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 changing 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 the very best worth.
The asset administration business is below growing scrutiny, with elements like ESG, disclosures, and operational resilience. Aberdeen faces greater compliance prices, and any lagging digital transformation could make cost-control more durable.
Even with this, I believe the inventory might do effectively going ahead and so I believe it’s value contemplating by traders.
