Ashmore rocked by jitters over emerging debt

Michael Bow
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EMERGING market specialist Ashmore Group crashed on the stock market yesterday after it revealed an exodus of cash from funds and a cut to management charges which will reduce revenues by $25m (£16m).

Shares in the company fell more than 12 per cent after it revealed that investors pulled $3.5bn from its funds in the quarter ending December, leading to a 4.1 per cent fall in total assets under management.

Chief executive Mark Coombes blamed the outflow on uncertainty over threats from a US tapering.

“Market performance and, to some extent, investor behaviour during the quarter continued to be influenced by uncertainty surrounding US monetary policy and the heightened market volatility experienced since early May last year,” he said.

The fund manager, which focuses on managing cash in riskier emerging markets, added that the annual fee levied on two of its special situation funds would also be cut after it was forced to re-negotiate terms with its customers. The new arrangement will see investors charged either two per cent of acquisition costs or two per cent of net asset value, whichever is lower.

The funds – similar to private equity-type vehicles – manage about $2.5bn overall. The cut in the two funds means total annualised revenues will be about four per cent lower.

However, management was bullish that investors will again warm to emerging market debt.

“There is now greater clarity over US monetary policy...This continues to give us confidence for the year ahead,” Coombes added.