(Alliance News) - Ashmore Group PLC on Thursday reported a drop in assets in the first half, as the asset manager dealt with the fallout of surging inflation and tightening monetary policy.
The emerging markets asset manager ended December 31 USD87.3 billion, down from USD94.4 billion six months earlier.
Ashmore recorded USD3.2 billion in net outflows in the first half and saw a USD3.9 billion negative investment performance.
"Emerging fixed income and equity markets were lower over the past six months, as weaker investor sentiment reflected concerns over inflation and the pace of US monetary policy tightening, slower growth in China, and new Covid-19 variants," Ashmore explained.
By asset class, Local Currency funds dropped to USD28.6 billion from USD31.9 billion over the six-month period. Blended Debt was down to USD20.8 billion from USD23.4 billion. Corporate Debt fell to USD9.5 billion from USD11.3 billion.
Helping partially offset this, External Debt assets rose to USD18.9 billion from USD18.7 billion and Equities grew to USD8.0 billion from USD7.7 billion.
"These financial results reflect the negative sentiment towards Emerging Markets assets at this point in the cycle. Consistent with the approach to previous periods of volatility, Ashmore's active investment processes have exploited market weakness to underpin future performance, and the group has made continued progress towards its strategic objectives," Chief Executive Mark Coombs said.
In the six months to December 31, pretax profit rose to USD116.0 million from USD106.2 million, but net management fees slipped to USD131.0 million from USD138.9 million.
Ashmore maintained its interim dividend at 4.80 pence.
Coombs continued: "Many of the factors that presented headwinds in 2021 are fading, so the macro environment is expected to be supportive. Emerging Markets typically outperform in a period of rising US interest rates, so a [US] Fed rate move should be a significant catalyst.
"Importantly, valuations across equity and fixed income markets do not yet reflect this, with equity markets trading close to relative lows compared with developed markets, and bond yields and spreads are highly attractive relative to history and developed world bonds. Therefore the backdrop supports outperformance of Emerging Markets assets and this should cause investors to increase their underweight allocations."
Shares in Ashmore were trading flat in London on Thursday morning at 279.00 pence each.
By Paul McGowan; paulmcgowan@alliancenews.com
Copyright 2022 Alliance News Limited. All Rights Reserved.
Ashmore (ASHM)
