Spread Betting Aberdeen Asset Management
Aberdeen Asset Management [ADN.L] is an international financial group, mainly based in the UK but with offices around the world. It employs nearly 2000 people. Its profits are growing substantially from an admittedly low point in 2009, after the economic crisis. It sponsored the Oxford and Cambridge boat race for a couple of years 10 years ago, and now has turned to sponsoring Cowes Week, with an initial commitment for three years.
It deals mainly with large investors who want to invest in funds with active management and curiously some traders spread bet on Aberdeen Asset Management stock itself. Undoubtedly, there are concerns about the continuing European financial crisis, even though the problem with the US economy has faded into the background. Aberdeen Asset has also look towards emerging markets to keep its fund returns high. Its profits come mainly from the management fees charged, so it is important that the company is seen as one in which large institutions should deposit the money.
The last decade has seen a host of acquisitions, all of which have served to make the company a significant player in the investment industry. It has only been listed in its current form on the stock exchange for about 20 years, having been born of an investment trust in the 1980s. It struck a particularly low point at the end of 2008, with shares listed at well under 100, but now it trades above 250. While it makes money for its clients, it is making significant moves with its share prices for regular investors.
There is a relationship between how well the funds perform and the share price, but it is not a direct one. Remember that Aberdeen Asset Management makes the majority of its company profits from management fees, so the performance of its funds is secondary to the company earnings. What it has to do is be a good performer in the fund industry, and better than competitors, so that it attracts investments. It appears that it is achieving this goal.
Aberdeen Asset Management Rolling Daily
Aberdeen Asset Management is an active stock, and capable of good moves for the spread better to spread bet on on. The current quote for a rolling daily spread bet is 256.06 – 257.54. While the minimum bet is £1 per point with IG Index, perhaps you would decide to risk £5 per point on an uptrend continuing.
If you have got it right, the price could go up to 278.30 – 279.78, and you may decide to close your spread bet and take your profits. You can easily work out how much they are. Your long wager was placed at 257.54, and it closed at the selling price of 278.30. That means you gained is 20.76 points. Multiplying by your stake, you won £103.80.
However, if the current price trend reversed, and the price fell, you might decide to cut your losses when the quote went down to 237.61 – 239.09. In this case you have lost, and the point difference is 257.54 less 237.61. That works out to 19.93 points which at £5 per point is a loss of £99.65.
You might have been able to save some of your loss if you had entered a stoploss order when you opened the spread trade. Simply by looking at the chart, you can see that the typical daily range is a maximum of 10 points, so you might have thought to put a stoploss at, say, 12 points away from your entry. Unless it is a guaranteed stop loss, which costs more in a larger spread, your bet may not be closed at exactly level you pick, but it should be close. Say it closed with the stop loss order at 243.92 – 245.40.
This time you have lost 257.54-243.92 points, or 13.62 points. Using a stoploss order means that you limited your loss to £68.10.
Aberdeen Asset Management Futures Betting
Aberdeen Asset Management is a financial company which has several funds, mainly for corporate investors. Its share price reflects the profits it makes from its commissions handling the funds. For a futures based spread bet, with an expiry date nine months away, the current quote is 258.77 – 261.89. If you think that financial companies are going to lose value in the next few months, you might want to place a short or sell spread bet for £6 per point.
If you are right, and the quote goes down to 241.63 – 243.48 for example, then you could close your bet and collect your profits. As a short trade, the spreadbet went on at 258.77 and closed at 243.48, giving a point difference of 15.29. Multiplying this by your stake, you have won £91.74.
It would be nice if you always won at spread betting, but you will have your share of losses. If the price had instead gone up to 274.53 – 277.51, you might have decided to close your bet and accept your losses this time, before they rose any higher. The point difference is 277.51 less 258.77, which is 18.74 points. This works out to £112.44 lost.
You always want to aim for greater winnings than losses, as this is one of the keys to improve your profitability. If you had taken out a stoploss order when you opened the spread trade, perhaps eight points away from the opening price, then your spread betting broker would have closed the trade for you automatically, cutting your losses. Say that it closed at 266.83 – 269.87. The number of points you would have lost this time is 269.87-258.77, or 11.1 points. If you multiply this by your stake on the bet of £6 per point, then you find that you would only have lost £66.60.
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