Ashmore Group’s assets fall on ‘widespread risk aversion’ but outlook is improving

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Ashmore Group (LSE:ASHM) said earnings and assets under management fell in the 12 months to June 30, 2022 as inflation and the war in Ukraine reduced “risk appetite” in the second semester.

Assets under management decreased 32% year-over-year to $64.0 billion, driven by negative investment performance of $16.6 billion and net fund outflows of 13 .5 billion, which the emerging markets investment manager attributed to “widespread risk aversion due to Ukraine war, inflation and higher rates globally”.

With the Russian invasion of Ukraine exacerbating geopolitical and macroeconomic pressures, the past 12 months have been difficult, the company said in its press release, adding that average assets under management were 7% lower than those of the previous year, at $83.6 billion.

But the company noted an improving outlook for emerging markets.

“While the global macroeconomic environment still presents some near-term uncertainty, conditions in emerging markets are improving and the breadth of investment opportunities helps to mitigate risk,” said Mark Coombs, Managing Director.

“Risk appetite will improve as some of the recent macro headwinds ease, supporting a rally in emerging market asset prices and higher investor allocations.”

The FTSE 250-listed group said adjusted net revenue for the full year of £257.2m was 13% lower year-on-year, while underlying profit (adjusted EBITDA) fell 16% to £164.3 million.

The asset manager said statutory pre-tax profit fell 58% to £118.4m due to “lower adjusted EBITDA”, and the impact of weaker markets affected the mark-to-market valuation of the group’s seed capital investments.

The loss of seed capital of £49.9 million for the period is unrealized but was the main reason for the drop in statutory profit, the company added.

It recorded net management fees of £243.5m and performance fees of £4.5m for the year ending June.

The shares rose 4.02% to 202.00p in early trade.

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