Emerging markets specialist Ashmore suffers £4.5bn wipeout (2024)

By Tamsin Brown
Updated: 22:10 GMT, 13 October 2011

Gyrating financial markets have wreaked havoc on the performance of funds at Ashmore and Man Group, prompting investors to dump their shares.

Ashmore admitted the negative performance of its funds had wiped £4.5billion off its assets in the three months to the end of September.

The emerging markets specialist invests the lion’s share of clients’ money in debt products but recently ramped up its exposure to equities after buying a majority stake in Emerging Markets Management in May.

The deal has arguably proved ill-timed given equity markets’ rollercoaster ride over the summer. Ashmore’s equity division suffered a 26.7 per cent drop in assets over the quarter. Shares in Ashmore fell 13.4p to 318p.

They have lost about 20 per cent since their elevation to the FTSE 100 index last month, wiping about £250million off the 42 per cent stake held by boss Mark Coombs, who led the management buyout of Ashmore from Australia’s ANZ Bank 12 years ago.

Shares in Man Group have also been on a downward trajectory and hit their lowest level since 2001 yesterday, falling 6.3p to 150p. The latest drop comes after the hedge fund giant revealed earlier this week that its flagship hedge fund AHL lost 5.5 per cent in the previous week. The fund was hit by the reversal in the markets’ fortunes – namely a rally in equities and sell-off in bonds.

AHL is estimated to account for about four-fifths of Man’s profits. Shares in Man were hammered last month after it admitted clients had pulled billions of pounds from its funds in the three months to September.

More encouragingly for Ashmore, clients have actually been ploughing more money into its funds, with net inflows of $0.2billion in the three months to September 30. But the poor investment performance of its funds meant overall assets under management plummeted 10.5 per cent to £37.4billion in the quarter.

Ashmore is boldly telling clients to top up their holdings. It said: ‘These market conditions provide some of the best investment opportunities and we are actively informing current and potential clients that this is exactly the time to be adding steadily to emerging markets.’

UK asset managers aren’t alone in suffering a torrid time. Across the Atlantic, Paulson & Co, the hedge fund founded by veteran money manager John Paulson, has seen its assets fall this year from £24billion to £19billion. One of his biggest funds is down 47 per cent.

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