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Emerging market struggles take toll on Ashmore

Emerging market struggles take toll on Ashmore

Emerging markets focused asset manager Ashmore saw its assets under management (AUM) decline by £1.9bn as the continued underperformance of its main asset class took its toll.

The firm, founded by the billionaire British fund manager Mark Coombs, reported net inflows of £1.9bn but said negative investment returns from emerging market assets of £3.9bn had led to a decrease in net assets under management of £2bn.

The information was contained in a quarterly update from Ashmore, covering the three months to 30 June. The firm said its assets under management at that date were £56.2bn, down from £58.2bn.

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The company said investment performance was negative across all areas of its business except alternative assets.

The company said certain areas of the emerging markets universe have been “oversold” and as a result it has made more investments in those areas.

The MSCI Emerging Markets index is down 6.6 per cent in 2018 year to 13 July, as investors fear the consequences of higher US interest rates and the possibility of a trade war reducing global aggregate demand.

Mr Coombs, chief executive of Ashmore, said: "Client activity levels continued to be broad-based through the quarter ahead of the typical seasonal slowdown.

"Asset prices weakened over the period, particularly in local currency markets, as returns were impacted by the combination of a stronger US dollar and weaker euro, risk aversion to developed world political uncertainty, and concerns about trade protectionism.

“This has left Emerging Markets valuations at levels last seen immediately after the US election in 2016, following which markets delivered a sustained rally."

He added: "While there is a small number of emerging countries that face challenges, most Emerging Markets economies are in even better health today. Therefore the recent sell off has created significant value opportunities on which an active manager such as Ashmore can capitalise.”

David.Thorpe@ft.com