Ashmore's AUM dips despite positive net flows

11th Sep 2012 07:54

Assets under management (AUM) at Ashmore Group fell back in the year to end-June, despite the fund manager enjoying a net inflow of funds in both halves of the year.AUM at the end of June stood at $63.7bn, down $2.1bn from a year earlier, as overall negative investment performance of $3.4bn exceeded the level of net subscriptions achieved of US$1.3bn. The negative investment performance was primarily driven by the weakness in equities and foreign exchange markets, though this was partially offset by positive investment performance in the group's external, corporate and blended debt themes."The group experienced positive net inflows during both halves of the year, with total subscriptions of $13bn," said Ashmore's Chief Executive Officer, Mark Coombs. "We are continuing to see strong growth in assets coming from Emerging Markets clients," he added.Average AuM over the 12-month period increased by $17.5bn (38%). Gross subscriptions totalled $13.0bn versus $23bn the year before. Gross redemptions increased in absolute terms to $11.7bn from $7.5bn the year before, "which at an overall level of 18% of average AuM remain on the low side by industry standards, although slightly up on the prior year," Coombs said. The absolute increase in redemptions was due to a combination of equities outflows in the first year after acquisition of new funds, and from retail multi-strategy assets raised in Japan in the prior period, "undoubtedly amplified by the extreme market volatility experienced during the year."Net revenue for the year to the end of June of £333.3m was in line with market expectations and a tad lower than the prior year's £333.8m. The group enjoyed a 21% increase in management fee income to £302.6m, driven by an increase in average AuM levels, but this was offset by the reduction of average revenue margins which were largely in line with the levels reported at the interim stage.A fall in performance fees to £25.4m from £85.4m the year before was not unexpected, as it is determined by levels of absolute investment performance, which reduce "as is normal at this point in the cycle after peaking immediately following the credit crisis."Performance fees were further reduced through the significant market sell offs at the end of the first quarter which largely eliminated performance fees for funds which have a fiscal year which ends later than March. Profit before tax of £243.2m for the year to the end of June was down 1% from the previous year's £245.9m, but ahead of the £229.40m the market had been expecting.Basic earnings per share eased to 26.8p from 28.1p the year before. The final dividend of 10.75p takes the full-year pay-out up to 15p, up from 14.5p the previous year."These results demonstrate the resilient nature of Ashmore's business," Coombs claimed. "The group achieved a satisfactory financial performance during a period of significant ongoing market volatility," he added.Coombs is backing the group's focus on emerging markets to pay off. "More and more investors are seeing Emerging Markets debt as an alternative to fixed income in general and with yields in the developed world either high for a good reason or yielding next to nothing, Emerging Market debt looks highly attractive," Coombs reckons. "Emerging Markets equities looks to be ripe for a good year given relatively low valuations, and specialist areas in small cap and frontier markets are bound to attract attention as investors lose their solely large cap bias in the search for high long term returns and outperformance," Coombs concluded.Share price reaction was muted, with the stock down 1.7p at 338p after an hour of trading. JH