Specialist asset manager the Ashmore Group has continued to see a drop in funds under management after the emerging markets sector was hit by Donald Trump’s election victory.
The group, which specialises in emerging markets, reported a $2.4bn (£2bn) fall in assets under management between October and December, with total AUM sagging to $52.2bn (£43.3bn) from the $54bn (£44.8bn) posted at the end of September.
This drop was largely caused by investment losses of $1.7bn (£1.4bn), but was also a result of net outflows amounting to $700m (£581m).
But the company’s chief executive Mark Coombs pointing out that the final quarter of 2016 was pummelled by the outcome of the US election in November, as emerging market investors were braced for the introduction of protectionist policies heralded by Mr Trump.
Emerging markets started sinking immediately after Mr Trump’s win, and a number of investment veterans have warned his policies could extinguish the good progress the sector made throughout 2016.
Mr Coombs also said Ashmore’s figures for the final quarter of the year were affected by the renewed strength in the US dollar and a steepening of yield curves.
“While these factors interrupted the improvement in sentiment towards emerging markets, the effect proved to be short-lived with asset prices strengthening in December and continuing into the new year.”
The Ashmore boss said he expects the sector to see further strong performance in 2017 and a return to the improving flow trend seen for most of last year.
He also pointed out that emerging markets produced very strong investment returns in 2016, delivering a 5 per cent increase in Ashmore's assets under management over the calendar year.
Peter Lenardos, analyst at RBC Capital Markets, said the US election interrupted the improvement in sentiment towards emerging markets, which therefore hit Ashmore’s funds.
Yet he said the firm’s net outflows were mainly experienced in local currency, multi-asset and external debt.
Despite lower market levels, Mr Lenardos pointed out that Ashmore's investment performance relative to benchmarks remained very strong throughout the quarter across all fixed income and equities investment themes.
He also indicated that the firm saw strong investment performance across all themes when looking at one year, while most themes saw good performance on a three and five-year basis.