Emerging Markets  

Ashmore assets boosted by emerging market rally

Ashmore assets boosted by emerging market rally

The strong performance of emerging market debt and equities boosted the assets under management (AUM) of emerging market fund manager Ashmore in the final quarter of 2017.

Total assets were up 7 per cent to £69.5bn for the three months to the end of December 2017 at the emerging markets focused asset manager, compared with the quarter to the end of September.

The MSCI Emerging Markets equity index returned 37 per cent in 2017, compared with 24 per cent for the All Country World index.

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Ashmore stated inflows into its emerging market local currency debt funds were particularly strong.

The period covered by this update corresponds with a period of weakness in the dollar, which serves to make emerging market debt denominated in the local currency, rather than the dollar, more attractive to investors.

Mark Coombs, chief executive officer at Ashmore, said: "Emerging markets assets have delivered strong absolute and relative performance over the past two years leading to higher client flows into the group's funds.

"Additionally, competitive currencies have been driving exports thus accelerating economic growth across emerging markets.

"The next phase of the cycle should see institutional flows stimulating domestic demand and so provide for continued attractive returns, particularly from local currency-denominated assets including equities."

The election of US president Donald Trump was expected to be bad news for emerging market assets, and Ashmore suffered in the immediate aftermath of his election win.

This is because markets feared protectionist policies from the US would reduce the ability of emerging markets to export, while populist domestic policies would send inflation much higher, and lead to US interest rates rising at a faster pace, which would strengthen the value of the dollar and weaken the ability of emerging market companies and countries to source credit.

But the struggle of Mr Trump to implement much of his legislative agenda has meant that scenario has not played out, aiding the performance of emerging markets over the past year.

david.thorpe@ft.com