Ashmore boss sees US rate cuts boosting investor sentiment

The boss of Ashmore Group is hoping that interest rate cuts in the United States will boost investors’ sentiment and staunch years of client withdrawals from the emerging markets-focused fund manager.

Its assets under management have shrunk from a peak of almost $100 billion in 2019 to $49.3 billion, driven by outflows as customers have shied away from bonds and equities in the developing world and pulled their cash out of the business.

However, Mark Coombs, Ashmore’s chief executive, thinks that a turning-point could be close at hand. He said the likelihood of interest rate cuts by the US Federal Reserve, combined with clarity about the identity of the next US president, should spur the appetite for assets in the developing world.

“The emerging markets continue to perform well,” Coombs, 64, said. “For capital flows to respond more powerfully to this positive backdrop requires near-term uncertainties to be resolved in some investors’ minds.

“Some of these factors, such as the phasing of the next Fed rate cycle and the outcome of the US election, will become clear over the coming months. Therefore, as pent-up demand is unlocked, the pick-up in investor interest in the emerging markets should gather momentum through the second half of 2024 and into 2025.”

The London-based Ashmore was created when Coombs, who shuns the limelight, led a management buyout of the emerging markets bonds business of ANZ, the Australian bank, 25 years ago. He built it into a leading investor in exotic markets and listed the company on the London Stock Exchange in 2006 in a flotation that crystallised a fortune for its founder.

However, Ashmore has come under pressure in recent years as demand for emerging markets assets has wilted in the face of American rate rises, worries about slowing Chinese economic growth and Russia’s invasion of Ukraine. Clients withdrew a net $8.5 billion from the group in the 12 months to the end of June, on top of net withdrawals of $11.5 billion the previous year and $13.5 billion in 2022.

However, gains from market movements added $2.1 billion during its last financial year and about 60 per cent of its assets outperformed their benchmarks over the past three and five years. Performance fees earned by Ashmore jumped to £22.7 million, from £5.1 million a year earlier, helping to drive a 15 per cent increase in the company’s annual pre-tax profit to £128.1 million.

Shares in the FTSE 250 company rose by 1½p, or 0.9 per cent, to close on 174½p.