April 14, 2010 / 8:38 AM / 9 years ago

REFILE-UPDATE 2-Ashmore sees local EM currency appetite return

(Refiles to correct ‘278 percent’ to ‘278 pence’ in paragraph 2)

* AUM up 4 pct to $33 billion, in line with forecasts

* Local currency AUM now at $6.1 bln, up 7 pct

* Shares down 0.68 pct to 278 pence

By Claire Milhench

LONDON, April 14 (Reuters) - Investor interest in higher margin local currency bonds is returning, said emerging markets fund manager Ashmore on Wednesday as it reported in-line assets under management for the end of its third quarter.

At 0748 GMT the shares were down 0.68 percent to 278 pence. Analysts at Singer Capital Markets said some short-term profit-taking could occur as the shares have risen by over 20 percent since the interims at end-February.

Ashmore reported a 4 percent increase in assets to $33 billion, lifted by net inflows of $0.8 billion, plus positive investment performance of $0.6 billion.

Recent EPFR Global data have indicated global inflows of $5 billion in the year to mid-March into emerging market debt funds, compared to $8 billion for the whole of 2009.

Graeme Dell, group finance director, told Reuters it was encouraging to see a 7 percent rise in assets in its local currency strategy over the quarter to end-March, to $6.1 billion.

“We expect local currency to be our biggest theme going forward,” he said.

Local currency strategies are higher margin products, but since the financial crisis, investors have tended to opt for external debt — dollar or euro-denominated issuance — rather than debt issued in the emerging market’s own currency, as this is perceived as higher risk.

Ashmore’s corporate high yield strategy saw a 29 percent increase in assets, to $0.9 billion, which Dell attributed to strong returns in 2009.

“The relatively higher return profile is beginning to attract some of the assets that historically would have been in external debt, which is becoming lower return,” he said. (Editing by Jon Loades-Carter)

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