Share price slides for emerging market investor Ashmore despite reporting a return to net inflows

 
Lucy White
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London-headquartered Ashmore also has offices in China, Colombia, India, Indonesia, Japan, Peru, Saudi Arabia, Singapore, United Arab Emirates and the United States (Source: Getty)

Emerging markets fund manager Ashmore hit a return to net inflows this year, amid signs of a better year ahead for the sector.

Assets under management increased to $58.7bn in the group's full year results, representing net inflows of $1.9bn, as index returns across the main emerging market asset classes performed well.

Read more: Ashmore share price falls despite attracting new money for the first time in three years

Ashmore's underlying earnings increased by 20 per cent to £172.3m, but disappointed analysts who had predicted a consensus figure of £173.7m. The share price had dropped by around 6.65 per cent at the time of writing.

“Ashmore has delivered strong investment performance for clients and grown assets under management by 12 per cent over the year through positive market performance and net inflows,” said the group's chief executive Mark Coombs.

“There remains substantial absolute and relative value available across the diversified emerging markets, and Ashmore's focused strategy means it is in a strong position to continue to deliver superior investment performance and to benefit as investors raise their allocations to emerging markets from underweight levels.”

Read more: Emerging market equities: unloved and under-owned

The London-listed asset manager noted that “the typical investor is underweight emerging markets” compared with representative benchmark weights. “This presents a significant medium-term growth opportunity,” it said.

Analysts at Peel Hunt agreed that Ashmore “is well positioned to benefit from improving demand from investors who generally remain underweight emerging market assets”.

The sector has struggled in recent years due to a stronger US dollar, a fall in commodity prices and the start of the US interest rate hiking cycle.

But Ashmore believes the fundamentals have remained strong, noting GDP growth and structural reforms in many countries.

Read more: Emerging markets and junk bonds suffered as investors thanked the Fed for the promise of higher US yields

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