Ashmore Group, a specialist emerging markets investor, saw assets decline by nearly a quarter due to the Covid-19 pandemic – but argues there is now a good buying opportunity in emerging market bonds and equities.
The London-listed firm’s assets under management (AUM) fell to $76.8 billion (€69.4 billion)) from nearly $100 billion at the end of last year – an overall reduction of $21.6 billion, said the firm in its quarterly financial report last week.
The UK-listed firm said investment performance was negative in all asset classes it manages due to the covid-19 pandemic, with corporate debt AUM seeing the largest decline in assets by 39%.
Negative investment performance accounted for $18 billion of AUM reduction and outflows totalled $3.6 billion.
Despite the overall impact on Ashmore, the firm said there had been inflows into its equity strategies, although the market turmoil had seen Ashmore’s value-based strategies underperform benchmarks.
Performance against benchmarks was still good over five years but had now “weakened” over one and three years, said the firm.
However, Ashmore said the emerging market sell-off triggered by the covid-19 crisis meant assets were now at their most attractive valuations for a decade. As an example, external emerging market debt was trading at 600 basis point or more over US Treasuries.
Mark Coombs, chief executive officer of Ashmore Group, said a return to unconventional monetary policy in the developed world and the implementation of debt-funded fiscal stimulus meant bond rates would remain “very low for a prolonged period”, providing support for medium to longer term investment in emerging markets.
Ashmore also reported that its corporate health reflected a resilient business model, with “a strong, liquid balance sheet with no debt” and over £700 million of financial resources including more than £400 million of cash.
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