16th Apr 2020 10:31
(Alliance News) - Ashmore Group PLC said Thursday its asset values took a severe nosedive in the three months to March 31, as the Covid-19 pandemic hurt financial markets across the globe.
At March 31, the emerging markets assets manager estimates its assets under management stood at USD76.8 billion, down 22% from the USD98.4 billion seen at the end of 2019.
All of Ashmore's fund classes saw a drop in assets over the three-month period. Blended Debt assets slipped 19% to USD21.5 billion; Local Currency dropped 23% to USD17.7 billion; External Debt by 19% to USD15.9 billion; and Corporate Debt by 39% to USD8.7 billion.
In the quarter, Ashmore recorded net outflows of USD3.6 billion, while the assets manager's investment performance shaved USD18.0 billion off assets.
"Investment performance was negative in all investment themes as a result of the sharp, severe fall in global markets from mid-February. As investors sought to raise dollar liquidity by the widespread selling of risk assets, including in Emerging Markets, Ashmore's value-based strategies underperformed their benchmarks. Performance against benchmarks has consequently weakened over one and three years, but remains good over five years," the asset manager said.
Ashmore noted, however, the sell-off has resulted in the "most attractive valuations seen in more than a decade since the 2008 financial crisis".
Turning to outflows, Ashmore said its Corporate Debt, Local Currency and External Debt themes were the main victims of this.
"Client redemptions concentrated in retail-oriented mutual funds in the first two themes including in the group's short-duration strategy, which accounted for the majority of the group's net outflow," Ashmore said.
Ashmore believes its business model is "resilient" enough to withstand the Covid-19 fallout, and pointed to its "strong" balance sheet.
At March 31, Ashmore had no debt with over GBP700 million of resources, including GBP400 million in cash.
Chief Executive Mark Coombs said: "As the developed world returns to unconventional monetary policies and debt-funded fiscal stimulus, their rates will need to remain very low for a prolonged period and the medium to longer term picture will continue to favour Emerging Markets' high real yields and stronger domestic growth stories. Many emerging nations have the policy flexibility to be able to implement any necessary changes given their size, local currency funding, relatively low indebtedness and high real interest rates. Some will, of course, face challenges, and therefore active management can identify the winners and losers and deliver outperformance as economies and markets normalise.
"While there is considerable short-term uncertainty in respect of the virus, its economic impact and investor risk appetite, longer-term investors recognise that reducing risk now, after a severe correction, crystallises mark-to-market positions and so instead are rightly taking stock to identify the optimal way to capture the significant recovery upside available over the next 12-24 months as the global economy resets. History repeatedly shows that this can be achieved through increasing allocations to Emerging Markets debt and equity at times of price dislocations and market stress such as this."
Shares in Ashmore were 1.7% higher in London on Thursday morning at 340.40 pence each.
By Paul McGowan; [email protected]
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