Ashmore assets decline in first quarter as dollar hits emerging markets

14th Oct 2014 08:10

Assets under management (AuM) at emerging markets asset manager Ashmore Group fell $3.7bn in the first quarter driven mostly by poor investment performance.AuM was $71.3bn at 30 September as a result of negative investment performance of $3.4bn and net outflows of $0.3bn."The decline in AuM over the quarter reflects predominantly the correction in markets towards the end of the period, driven by US dollar strength," said chief executive Mark Coombs.All the group's investment themes suffered from the weaker market conditions.Bonds across all fixed income themes performed relatively well but a stronger US dollar affected local currency returns, and therefore investment performance was weakest in local currency and blended debt.Coombs remained bullish about future investment performance on a fundamental level: "Against this backdrop, the fundamentals in emerging markets continue to be supportive and many of the market uncertainties of the past year are being resolved: the electoral cycle is substantially complete and has resulted in favourable reformist agendas in many countries; geopolitical risk is evident but isolated; and the US Treasury market has reacted in a measured way to the increasing prospect of higher short term rates."The themes of local currency, blended debt and corporate debt each delivered net inflows. Net outflows were experienced in the overlay/liquidity, equities and external debt themes, while modest outflows continued from the Japanese multi-strategy retail funds.AuM in the alternatives theme reduced through realisations and subsequent capital returns to investors.Broker Liberum said in order to hit its target, Ashmore would need to make net inflows in the current financial year of $5bn. "This feels a stretch at this point," analysts said, which created a slight downside risk to forecasts.In a more constructive vein, analysts David McCann, James Hamilton and Jonathan Goslin at Numis commented: "Whilst we still see little to no earnings growth over the next few years mainly due to margin pressures (although we still see a good long term EM growth story once margins have stabilised in a few years time), we believe this is now more than compensated for by the lower valuation and in particular the 5.5%+ yield."