Ashmore gets off to solid start amid volatile emerging markets

Ashmore recorded net inflows of $1.9bn in the past quarter as clients looked to take advantage of price volatility across emerging markets, which management expects to continue in coming months.

After a record performance in the 12 months preceding it, the FTSE 250 fund manager grew assets under management by a solid $2.5bn during the first three months of its new financial year, up 3.4% to $76.4bn, helped by positive market movements of $0.3bn and acquired assets of $0.3bn.

Markets were volatile during the quarter, particularly in local currency-denominated themes amid a strengthening of the US dollar, but Ashmore said that "sentiment improved towards the end of the period following positive developments in certain high profile countries".

Net inflows were spread across the fixed income themes of external debt, local currency, corporate debt and blended debt.

Blended debt, the largest theme, saw AuM increase 4% to $20.4bn by the end of September, while the external debt theme grew 7% to $15.5bn, and corporate debt by 8% to $10.6bn. All three benefited from positive absolute investment performance.

Emerging market equities saw flat net flows during the quarter, with a 5% fall in AuM as the strength of the US dollar hit investment performance.

Local currency, the second largest theme, also saw negative absolute performance but volatility attracted inflows to grow AuM 1% to $17.2bn.

Chief executive Mark Coombs said: "Net inflows continued through the quarter as clients responded positively to the opportunities created by price volatility across a broad range of emerging markets asset classes.

"Ashmore's active investment processes have been selectively adding risk and relative performance remains strong.

"Given the likelihood for mispricing around near term events such as elections in the US and several emerging markets countries, we anticipate there will be more opportunities to buy attractively-valued assets and to embed long-term value into portfolios."

Analysts at broker Shore Capital said that as the company had guided at its final results in early September that clients were generally looking to take advantage of EM weakness, rather than withdrawing assets, "we view this update as reassuring but unlikely to drive material forecast changes this early in the financial year".

For the full year ShoreCap forecasts net inflows of $3.7bn, 5% of opening AuM, though the wider City consensus for net inflows was up at $6.7bn.

They added that the wider sell off seen so far in early October, notably US treasuries, means that an opportunity to upgrade to 'buy' may well still present itself. "If this is based on a combination of weaker flows and negative performance then we would suggest that investors can afford to be patient in progressively building a position in a quality asset manager."