Launching into the retail world in 2012

As it prepares to celebrate its 20th anniversary of investing in emerging markets in 2012, Ashmore Investment Management is focusing on its next stage of development: cracking into the retail investment world.

The company, which launched its first fund – the Ashmore Emerging Markets Liquid Investment Portfolio – in October 1992, has always drawn a proportion of its assets from retail investors, but has previously concentrated on the institutional market, which accounts for approximately 84 per cent of its business.

Jerome Booth, head of research at Ashmore, says the company has historically had a three stage strategy – encouraging institutional investors into emerging markets, developing products across fixed income, equity and alternatives, and raising money within emerging markets – so the move into retail is almost a “fourth leg to that”.

Unsurprisingly, having specialised in the region for so long, the company is very passionate about emerging markets opportunities, in spite of the sector’s recent poor performance, with the MSCI Emerging Markets recording a 17.47 per cent fall for the year to December 21, while the IMA Global Emerging Markets sector was even worse with a loss of 18.15 per cent, according to FE Analytics.

Mr Booth explains: “It is true that some emerging market asset classes are volatile, but we have to understand that volatility is not the same as risk. Emerging markets are volatile, and they will continue to be volatile, just as developed markets are. But while emerging markets might have flows in and out there’s nothing fundamentally risky, or riskier, about these markets than previously. All we’re seeing is some foreign investors selling, and local investors – who are actually dominant in many of these markets – being complacent.”

He points out as people become increasingly worried about Europe and the US, some of the money invested will go back to those countries.

But Mr Booth argues the bigger risk is that if there is a depression in the developed world and emerging market money returns to emerging markets, the volume of money invested is approximately $9trn (£5.8trn) by emerging markets into Europe and the US. “We’ve got to recognise that the risk we really care about is really big change and that is all in the developed world. The volatility, the short-term movement, is not permanent and is therefore an opportunity. That’s why it’s a particularly attractive time to invest now, precisely because these markets have come off. But that does not mean that they are somehow more risky than we thought they were a year ago. It means that they do have more upside.”

With continued opportunities in the region the company is looking to make the most of its range of 15 Luxembourg-based Sicavs and more retail focused US funds, to target new retail clients and financial advisers or intermediaries.