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Ashmore has a strong fund performance track record, says Barclays

Published: 21:50 27 Apr 2018 AEST

money
"Ashmore has seen a strong flow recovery in the last five quarters," Barclays says

Ashmore Group PLC (LON:ASHM) has a strong fund performance track record, Barclays said as it turned positive on the investment manager.

Barclays upgraded its recommendation on the investment manager to ‘overweight’ – the equivalent of a ‘buy’ rating – from ‘equal weight’. The bank also lifted its target price on the shares to 465p from 430p.

“Ashmore has seen a strong flow recovery in the last five quarters,” the bank said in a note on European asset managers.

“Despite choppy markets in Jan/Feb, Ashmore’s flows were impressively resilient and enjoyed strong net inflows across its emerging markets debt strategy.”

In the third quarter, assets under management rose by 10% to US$76.5bn after achieving its strongest net inflows since June 2013, boosted by demand for emerging market assets.

READ: Ashmore shares jump as it reports 10% growth in third quarter assets

Barclays said 80-90% of the group’s AuM has outperformed one and three-year benchmarks

“The group’s niche emerging markets expertise and strong balance sheet also look more defensive against regulatory threats,” the bank said.

Regulatory headwinds 

In April, the Financial Conduct Authority’s asset management market study published final remedies to better protect consumers against failed investments.

 Barclays thinks remedies that increase transparency on fund performance data and shed light on “benchmark-huggers” could leave asset managers more susceptible to revenue margin pressure.

The bank believes Jupiter Fund Management PLC (LON:JUP) may be vulnerable to the FCA’s clampdown.

"Jupiter has a high retail bias (87% AUM in mutual fund) and thus a higher blended fee margin than industry average, which could leave it more susceptible,” it said.

Jupiter downgraded to 'underweight' 

Barclays downgraded the stock to ‘underweight’ from ‘equal weight’ and cut the target price to 395p from 545p.

While Jupiter enjoyed strong net inflows of £5.5bn in 2017, the company reported net outflows of £1.3bn in the first quarter.

READ: Jupiter Fund Management dives after tough first quarter

“We are cautious around the high dependency of net inflows in 2017 on the £10bn Jupiter Dynamic Bond fund, which in 2018 year-to-date is suffering from weaker performance and is the main driver of flow reversal,” Barclays said.

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