IN turbulent times and volatile markets, it might seem too bold to buy shares in fund managers.

In today’s climate of fear, the suspicion is that asset managers and insurance groups – alongside the banks – are sitting on losses linked to the turmoil in the credit markets.

Unsurprisingly, fund managers have been hammered. Aberdeen Asset Management’s shares are down almost 12% this year, but the sell-off is even more painful over a month – a fall of 17%. Its peers have also been hit hard. New Star is off 31% in a month, despite denials of repeated gossip about a profit warning, and 47% this year. Over a month, Henderson has slumped 23% and Schroders is down 13% even though it announced record quarterly profits in October.

Is it time to buy? That’s a tough call. The word in City circles is that many investors have given up trying to call the bottom for financial stocks after several failed attempts.

Most fund managers have steered well clear of the toxic waste of collateralised debt obligations. Analysts are divided over whether Henderson (up by 18% this year) deserves a premium rating – largely based on more of its revenues coming from performance fees and higher-margin funds.

Aberdeen – due to report full-year results tomorrow – looks the most undervalued, trading at about 12 times forecast earnings next year against 13.8 for the sector. That looks unfair, given that chief executive Martin Gilbert said the first 11 months were the best the group has ever had. Gilbert, a shrewd deal junkie, has snapped up some American funds and a Glasgow boutique this year. But a tilt at troubled F&C Asset Management is thought to be too messy right now. Aberdeen’s profits are expected to jump by 30% or so – a decent result in troubled times.

Will it change sentiment? Not immediately. But investors who can see beyond the short term should jump in. Hogg Robinson THE valuation of Hogg Robinson has become “silly”, if you believe some analysts.

It’s been a rocky ride for the corporate travel specialist, with the shares falling 12 days ago to half the 90p flotation price of a year ago.

That seemed tough given that underlying interim profits rose by 14%. Hogg should also gain from the current market turbulence as clients turn to it to help save money.

The dip came after Hogg warned about softening demand in its events business and from smaller customers – but this accounts for just 10% of sales and the group is confident of hitting full-year profit forecasts.

The trouble is that Hogg is still being punished for a profit warning in June and general nervousness about cyclical businesses.

Certainly, the shares look decidedly cheap – trading at about nine times this year’s profits – even after a 45% rally in the past 12 days.

Still, some analysts’ targets of 100p look more than a bit rich. A punt strictly for the brave.

grant.ringshaw@sunday-times.co.uk

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