In its half-year results published today (7 February), the emerging markets specialist reported pre-tax profits of £74.5m, a 38% increase from the previous year, despite a 13% fall in net revenues to £93.4m.
The hit to revenues reflected a 10% lower average AUM of $53.3bn over the six-month period and reduced FX gains, partially offset by higher performance fees of £8m.
The pre-tax profits rise was attributed to capital gains of £19.6m delivered by the group’s active seed capital investment programme, as well as interest income of £12.8m achieved on its cash balances.
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Ashmore has used its balance sheet to seed its funds since 2009 to deliver growth in third-party AUM and secure long-term revenues.
The programme supports the initial development of local asset management platforms by providing scale to existing funds to enhance marketability and establishing new distribution channels.
At the end of the six-month period, the firm’s AUM was down 3% to $54bn versus the same period last year, driven by net outflows of $4.5bn, which were partially offset by positive investment performance of $2.6bn.
“This period comprises two contrasting quarters with lower market levels and risk aversion influencing performance and flows in Q1, followed by a strong rally and an improvement in net flows delivering AUM growth in Q2,” said CEO Mark Coombs.
The chief executive said that the factors driving the strong performance of emerging markets during the last six months, such as superior growth, effective monetary policies and a weaker US dollar will underpin “further increases in asset prices in 2024”.
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Despite geopolitical risks during a year of global elections and ongoing economic challenges in China, Coombs said “there is a strong case” for reallocating assets from “heavily indebted” developed markets to the emerging markets.
“Many of the economies are sound, fiscal and monetary policies are sensible, and absolute and relative valuations are attractive,” he added.
“Ashmore continues to deliver outperformance for clients across a broad range of strategies and is well positioned to capitalise on increasing capital flows as investors recognise the superior risk-adjusted returns available in emerging markets.”
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