ii view: Ashmore still a high-yield play on emerging markets

Full-year results to 30 June

• Total Assets under Management down 3% from a year ago to $47.6 billion (£35.2 billion)
• Adjusted net revenue down 22% to £146.5 million
• Adjusted profit (EBITDA) down 33% to £52.5 million
• Pre-tax profit down 15% to £108.6 million
• Final dividend unchanged at 12.1p per share
• Total dividend for the year unchanged at 16.9p per share

Chief executive Mark Coombs said:

"Ashmore's strategy is aligned with the opportunities in emerging markets and the consistent business model mitigates the impact of market cycles over the longer term. 

"Ashmore's active investment processes are delivering outperformance for clients against a positive backdrop for emerging markets, and its distribution team is active around the world with both existing clients and potential investors, emphasising the need to deploy more capital to capture the favourable trends evident across emerging markets.”

• Invest with ii: SIPP Account | Stocks & Shares ISA | See all Investment Accounts

ii round-up:

Specialist emerging markets fund manager Ashmore Group (LSE:ASHM) today detailed adjusted annual profit that missed City forecasts, hindered by increased staff costs and currency moves crimping management fees. 

Full-year adjusted net revenues down 22% to £146.5 million fed through to adjusted profit of £52.5 million, a fall from last year’s £77.9 million. Analysts had expected £57.9 million. Pre-tax profit, including strong returns on seed capital investments, fell by a more sedate 15% to £108.6 million. 

Shares in the FTSE 250 company fell 5% in UK trading having come into these latest results up by close to a tenth so far in 2025. The FTSE 250 index is up 4% year-to-date. Shares in larger more generalist fund manager Schroders (LSE:SDR) are up by 13% over that time. 

Ashmore invests in asset classes including government and corporate debt, equities, and real estate across emerging markets on behalf of both institutional and retail clients.

Fund withdrawals of $5.8 billion exceeded investment gains of $4.1 billion over the year to leave overall assets under management (AUM) down 3% from a year ago at $47.6 billion (£35.2 billion).

A final dividend of 12.1 per share payable to eligible shareholders on 8 December, leaves dividends for the year unchanged at 16.9p per share.

Net outflows of $5.8 billion was an improvement from $8.5 billion the year before, with management highlighting expected superior emerging market economic growth as well as investors questioning current US dominance.

Ashmore’s outperformance of emergmng Markets improved to 57%/70%/81% over 1,3 and 5 years, up from 40%/59%/62% as of late June last year. 

Broker UBS reiterated its ‘buy’ stance post the results. A first-quarter trading update is scheduled for 14 October. 

ii view:

Coming to the UK stock market in 2006, Ashmore largely focuses on emerging market debt or bonds, with equity and alternative asset accounting for just under a fifth of AUM. Within core debt, or fixed income, Ashmore manages across the themes of external currency priced debt, local currency priced debt, corporate debt and blended debt products. 

For investors, a full-blown global trade war could prove bad for exports from emerging market nations, hindering economic growth. The highly uncertain economic outlook offers many routes for the US dollar to potentially strengthen, dampening emerging markets and causing clients to withdraw funds - emerging market debt is often priced in US dollars with a stronger dollar making interest payments more expensive. Competition generally across the fund management industry remains intense, while a forecast price/earnings (PE) ratio above the three- and 10-year averages may suggest the shares are not obviously cheap.

• Why investors shouldn’t worry about weak stocks in September
• Dividend play M&G suffers profit miss but inflows surprise
• Huge month for dividends as Lloyds Bank, BP, Shell, L&G pay out

More favourably, US tariffs could see less trade conducted with the US, reducing demand for the US dollar and thereby weakening it, benefiting emerging markets. Ashmore’s specialist focus on emerging markets helps set it apart from the pack. Consolidation across the asset management industry remains a possibility, while financial resources held as of late June of £350 million continues to support shareholder returns. 

In all, and despite ongoing risks, exposure to emerging markets and a forecast dividend yield of over 9% are likely to keep the specialist fund manager on investors' radars.

Positives: 

• Diversity of assets managed
• Attractive dividend (not guaranteed) 

Negatives:

• Uncertain economic outlook
• Fee pressure from ETF funds

The average rating of stock market analysts:

Hold