Emerging markets retreat continues to weigh on Ashmore

Ashmore, the emerging markets-focused investment group, has reported a 4 per cent third quarter decline in assets under management as investors continue a retreat from its core markets, spooked by the strengthening US dollar and tumbling commodities prices.

Assets under management during the three months to March 31 fell to $61.1bn from $63.7bn during the previous quarter, following outflows of $2bn. Ashmore also admitted to a negative investment performance of $600m.

In January, Ashmore reported that total assets under management had fallen 10.7 per cent as investors ditched the developing world's stock and bond markets amid economic slowdown and soaring political risk in Russia and the Middle East. The 15 largest emerging economies experienced their biggest absolute capital outflow since the crisis in the second half of last year, according to ING.

On Tuesday, Ashmore said fixed income and equity markets had begun to recover in the third quarter following a heavy sell-off in December and January, but returns in local currencies have continued to take a hit from the renaissance of the US dollar.

Ashmore said that its performance in the latest quarter reflected what it called "negative absolute performance in the local currency theme, although performance in this theme continues to be strong against benchmarks".

Ashmore said it had seen a "modest" positive performance in external debt and a negative performance in corporate debt, alternatives and multi-strategy. Blended debt and equities performance was flat over the period, the fund manager said.

The results came a day after emerging market equities began the week by rallying for an 11th straight day, the longest uninterrupted streak of gains in 12 years after investor sentiment was bolstered by speculation that the US Federal Reserve will refrain from raising rates in coming months.

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"Those investors willing to look beyond short-term price volatility and to focus on fundamentals are benefiting from the recent recovery in markets. However, some investors remain cautious given continued uncertainties," said Mr Coombs.

"In our experience, while flows tend to lag investment performance, the absolute and relative value opportunities across the range of emerging markets asset classes will increasingly be recognised by investors."

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