Ashmore: Billions pulled from fund manager as risk appetite remains ‘subdued’

Emerging markets asset manager Ashmore has reported that customers pulled billions out of its funds for the second successive quarter as the firm suffered from a “subdued” risk environment.

The firm reported that clients pulled $2bn (£1.6bn) from the firm in the three months to June. Negative investment performance detracted another $400m (£309m).

“Investor risk appetite remains subdued and institutional decisions to reduce Emerging Markets exposure continue to drive net outflows,” Ashmore said in a trading update.

Clients pulled the most money from the firm’s blended debt funds, while there were also small outflows from corporate debt and equities. This exceeded inflows into local currency and external debt funds.

Looking at market performance, external debt, corporate debt and equity all delivered positive returns but local currency bond returns were held back by a strong dollar.

In total, Ashmore’s assets under management stood at $49.5bn (£39.2bn) at the end of June, down from $51.9bn (£40.2bn) at the end of March.

Despite the difficult risk environment, Mark Coombs, Ashmore’s boss, argued that emerging markets remained an attractive prospect for investors and would likely only get more attractive.

“Emerging markets have demonstrated resilience over the past few years, with effective monetary and fiscal policies underpinning superior GDP growth,” he said.

“Further growth is supported by structural economic reforms in many emerging countries. In contrast, the developed world faces numerous headwinds following a period of pro-cyclical fiscal expansion and a sharp increase in the cost of government debt.”

“As the trajectories of emerging and developed countries continue to diverge, investor appetite for Emerging Markets exposure will improve and capital flows will follow, supporting higher risk-adjusted returns in Emerging Markets over the medium term,” Coombs concluded.