Charlemagne rethinks cost base as assets fall

Emerging markets boutique Charlemagne Capital is set to review its cost base after its assets under management fell significantly in the first half of the year.

In its latest interim management statement the group said its assets had fallen 8.1 per cent since January 1, which had already impacted on performance fees.

Charlemagne said: “Although the group remains profitable overall in the year to date, an increase in assets is required in order to ensure sustainable profits on a recurring management fee basis. Under current circumstances, the generation of performance fees during the remainder of the year will be a significant factor in determining full year profit levels.

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“We are reviewing the cost base but are committed to preserving the necessary infrastructure required to service our investors and for future expansion.”

Charlemagne had $2.4bn (£1.6bn) in assets under management as of June 30. Although the group generated $11.9m in management fees in the first half of this year - 10.2 per cent more than the previous six months - its performance fees fell to $0.5m from $0.9m in the first half of 2012.

In spite of this, the company said its funds - including the Charlemagne Magna Emerging Markets Dividend fund - had performed strongly relative to the falls in emerging equity markets.

The company said: “Equity markets have overreacted [to tapering fears] and have quickly over-discounted a worst possible outcome. Deflationary forces are still such that meaningful interest rate hikes are a long way off and valuations are sufficiently below average to suggest returns from such levels should typically be strong over subsequent 12-18 month periods.”