UK fund manager Ashmore’s profit up despite emerging market sell-off

UK fund manager Ashmore's profit up despite emerging market sell-off

LONDON Emerging markets money manager Ashmore Group reported a rise in profit and revenue for the year ending June, benefiting from a rise in performance fees, cost cuts and a stronger U.S. dollar, sending shares in the UK-based firm higher on Tuesday.

The improvement came despite a 21 percent drop in its assets under management (AUM) as investors asked for their money back due to uncertainty over the health of the Chinese economy and the prospect of an interest rate hike in the United States.

Profit before tax rose 6 percent to 181.3 million pounds ($278.37 million), while net revenue increased 8 percent to 283.3 million pounds, Ashmore said in a statement. Assets under management fell to $58.9 billion from $75 billion a year ago on the emerging markets sell-off, which has rattled rivals such as Aberdeen Asset Management.

“With the events in China really taking the centre stage and grabbing the headline, sentiments and client appetite is weaker again,” said Chief Financial Officer Tom Shippey.

“It pushes out the flows recovery by another couple of months or so until some stability returns and people get a handle on where value is apparent and where future returns are likely to come from,” he added.

At 0754 GMT, Ashmore’s shares were up 5 percent, outperforming 1.5 percent gain by the FTSE 100 Index.

Portfolio losses led to $6 billion reduction in its AUM, while net outflows accounted for $9.5 billion during the period. More than half of the outflow was due to a small number of relatively large account redemptions, the firm said.

Performance fees earned rose by more than four times to 13.3 million pounds as the alternative funds it managed were unaffected by the sell-off.

The firm, which earns a majority of its fees in U.S. dollars, benefited from the currency’s strength, leading to a foreign exchange gain of 18.5 million pounds, up from a 30.1 million pound loss the previous year.

Ashmore, which said Peter Gibbs will succeed Michael Benson as the firm’s chairman next month, proposed a final dividend of 12.1 pence a share and said 60 percent of its AUM was outperforming benchmarks over three years.

($1 = 0.6513 pounds)

(Reporting by Nishant Kumar; editing by Simon Jessop and Louise Heavens)

UK fund manager Ashmore's profit up despite emerging market sell-off