ii view: Ashmore shares down again after disappointing City

Third-quarter trading update to 31 March

• Total Assets under Management down 5% from the previous quarter to $46.2 billion (£35.1 billion)

Chief executive Mark Coombs said:

“Ashmore's active investment processes continued to deliver outperformance across a broad range of strategies. However, individual institutional asset allocation decisions resulted in a net outflow for the quarter.”

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ii round-up:

Specialist emerging markets (EM) fund manager Ashmore Group (LSE:ASHM) today detailed third-quarter trading below City hopes as some of its institutional clients reduced their emerging markets exposure.  

Fund withdrawals of $3.9 billion (£3 billion) exceeded analyst forecasts for net outflows of $0.6 billion, with positive EM investment performance of $1.3 billion leaving overall assets under management down 5% from late December to $46.2 billion.

Shares in the FTSE 250 company fell 5% in UK trading having come into this latest news down 16% year-to-date. That’s similar to generalist fund manager Rathbones Group (LSE:RAT) and worse than a near 9% fall for the FTSE 250 index itself in 2025.  

Ashmore invests in asset classes including government and corporate debt, equities, and real estate across emerging markets on behalf of both institutional and retail clients.

The fund manager flagged positive core EM index returns during the quarter of between 2% and 4%. These were driven by factors including a weaker US dollar, economic resilience, and positive developments in China's technology sector. 

Ashmore also highlighted increased market volatility since the end of the quarter on the 31 March due to US and China trade tariff uncertainties, but with management pointing to broadly resilient EM performances. 

Management points to increasingly powerful reasons for investors to rebalance their asset allocations away from US capital markets, such as tighter fiscal policy and a smaller government in the US, the start of fiscal stimulus in Europe, higher rates in Japan and China's focus on boosting domestic demand.

When combined with the impact of aggressive trade tariffs, Ashmore’s management believes that such factors could mean a weaker US dollar, a trend which should prove supportive of EM performance. Given emerging market debt is often priced in dollars, any weakness in the greenback makes interest payments more affordable. Because commodities such as oil are also priced in dollars, a weaker US currency makes commodities such as oil more affordable, therefore aiding economic growth. 

A fourth-quarter trading update is scheduled for 14 July, with full-year results to follow on 5 September. 

ii view:

Started in 1992 as part of the Australia and New Zealand Banking Group, Ashmore became independent in 1999, going on to list on the London Stock market in 2006. Largely focused on emerging market debt, or bonds, Ashmore manages across the six investment strategies of external currency priced debt, local currency priced debt, corporate debt, blended debt products, equities and alternative assets. Equities and alternative assets accounted for just under a fifth of assets under management during this latest quarter. 

For investors, a full-blown global trade war would prove bad for exports coming from emerging market nations, hindering economic growth. The highly uncertain economic outlook offers many routes for the US dollar to potentially strengthen, dampening EMs and causing clients to withdraw funds. Competition generally across the fund management industry remains intense, while a forecast price/earnings (PE) ratio above the three-year average may suggest the shares are not obviously cheap.

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On the upside, US tariffs could potentially see less trade being conducted with the US, reducing demand and thereby weakening the dollar, benefiting emerging markets. Ashmore’s specialist focus on EMs helps set it apart from the pack. Consolidation across the asset management industry remains a future possibility, while net cash held as of 31 December 2024 potentially supports shareholder returns. 

For now, a forecast dividend yield above 10% is likely to see existing shareholders remain loyal. That said, highly volatile markets and increased economic uncertainty may persuade potential new investors to take a ‘wait and see’ approach for now. 

Positives: 

• Net cash held of £342 million as of 31 December
• Attractive dividend (not guaranteed) 

Negatives:

• Uncertain economic outlook
• Fee pressure from ETF funds

The average rating of stock market analysts:

Hold