The London emerging markets house grew assets under management by 18% to $69.5bn over the first half of the year as it took in $7.9bn of net inflows.
While flows are reported in USD, the company’s financial results are in GBP.
The group’s pre-tax profits lagged behind at £99m for the six months to 31 December 2017, compared with £121.5m in the same period a year prior, which it said was due to foreign exchange movements and lower earnings from performance fees.
Revenue also fell flat at £140.3m.
EM popularity
The FTSE 250 fund group has maintained its strong performance from the previous quarter, when it delivered its highest net inflows in four years.
Of its range of EM-related products, the firm’s local currency funds attracted the most inflows during the period, bringing in $4.1bn, which offset $1.7bn worth of redemptions. Ashmore’s multi-asset range was the only category to end the reporting period with net outflows, which totalled $100m.
Gross redemptions across all its strategies totalled $7.1bn over the first half of the year.
To capitalise on the recent surge in EM popularity, Ashmore said it would continue to add to its equity capabilities. Over the medium term, its goal is to have equities account for 6% of the group’s AUM.
The EM debt specialist added that it intends to grow its alternatives product range, focusing particularly on Latin America, the Middle East and Asia.
Outpace developed
In its assessment of the market, Ashmore stated that it expects emerging markets to continue to outpace developed market growth.
“This positive outlook for emerging markets is set against a background of continued challenges facing developed markets,” said chief executive Mark Coombs. “In the developed world, economic growth is relatively slow, high leverage constrains central banks’ ability to raise interest rates, there is little occurring by way of reform, and valuations appear stretched in both equity and fixed income markets. The opportunity cost of being overweight developed markets and underweight emerging markets is high and rising as the latter enter a third consecutive year of outperformance.”
Specifically, he highlighted alpha generation opportunities in Brazil and Mexico with upcoming elections and in countries currently undergoing major reforms like China, India and Argentina.
Even the prospect of a stronger dollar or a recession in the US will not be enough to stunt emerging markets upward trajectory, according to Coombs.
“The resilience shown by emerging markets in the 2011 to 2015 period in the face of challenges that originated primarily in the developed world, suggest that the asset classes are able to continue to deliver appreciable absolute and relative returns and attract significant investor flows over the medium term. The fact that investors remain underweight emerging markets adds further support to the view that the cyclical recovery has only just begun.”
