September 10, 2013 / 10:27 AM / in 4 years

Fund manager Ashmore says clients stick with emerging markets

LONDON (Reuters) - Fund manager Ashmore Group Plc said institutional clients had largely stuck with its core emerging markets range as their solid long-term outlook offset recent jitters in the sector.

London-based Ashmore, headed by billionaire Mark Coombs, has capitalized on the explosion in investor interest in emerging markets in recent years.

It reported a higher than expected 6 percent rise in pretax profit and said it remained convinced of the durable appeal of emerging markets such as China where its funds are invested.

Ashmore Group Finance Director Graeme Dell said the recent exit from emerging markets had been overdone. “The prospects for global growth are still centered on emerging markets. That’s unchanged and seems to have been parked outside of people’s minds.”

Ashmore shares jumped 8 percent to 392 pence by 0956 GMT after rising as high as 393.5 pence, their highest in three months.

Emerging markets have lately taken a hit on expectations that the U.S. Federal Reserve is set to withdraw its monetary stimulus, which had sent a wave of cheap money into higher-returning assets around the world.

Dell, who declined to give specific data about client flows since the end of June ahead of Ashmore’s next scheduled trading statement in October, said much of the sell-off had been driven by retail clients rather than institutional clients, which account for around 90 percent of Ashmore’s asset base.

Through the 12 months to the end of June, Ashmore said its assets under management had risen 22 percent to $77.4 billion.

This, as well as a strong investment performance before the May sell-off, helped it report a pretax profit of 257.6 million pounds ($405 million), up 6 percent on the prior year and ahead of a Societe Generale forecasts of 233.7 million.

Ashmore said it earned 33.4 million pounds in performance fees, up from 25.4 million in 2012 and above the 21.3 million forecast by UBS.

“Although flows are likely to slow from their recent highs, institutional client activity levels appear to be healthy and medium-term guidance remains unchanged,” UBS analysts said in a note.

The group said its cash had grown by 48.9 million pounds to 395.5 million at the end of June. Dell said Ashmore may use the money for acquisitions, particularly in emerging markets where it has less of a local presence.

Ashmore also said it would pay a total full-year dividend of 16.1 pence per share, up from 15p a year ago. This is set to bank Coombs, who owns 41 percent of the company, almost 47 million pounds. ($1 = 0.6361 British pounds)

Editing by Louise Heavens and David Holmes

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