ASHMORE GROUP PLC Ashmore Group plc
Investor presentation
16 June 2017
Agenda
9.30am Mark Coombs 9.45am Jan Dehn
10.30am Alexis de Mones, Robin Forrest, Andy Brudenell
11.15am Break
11.30am Christoph Hofmann
pm Tom Shippey 12.15pm Tom Shippey 12.45pm Q&A
Ashmore today
Strong fundamentals & opportunities across Emerging Markets Investment processes deliver long-term outperformance
Growth potential from raising allocations Diversification through intermediary business
Local network accesses rapidly-growing markets Robust and flexible business model
Ashmore today
Mark Coombs, Chief Executive
Focused Emerging Markets specialist with strong performance and flexible business model
Founded in 1992
Three-phase strategy to capture benefits of Emerging Markets growth
Scalable operating platform
AuM of USD 55.9bn (as at 31 March 2017)
eight Emerging Markets investment themes
Active, valued-based investment philosophy delivers consistent outperformance for clients across market cycles
High-quality diversified global client base
Attractive long-term returns in Emerging Markets
3,100
2,600
Index 1992=100
2,100
1,600
1,100
Robust and flexible business model
interests aligned through remuneration policy and equity ownership
cost model and discipline delivers high EBITDA margin
cash generation and strong balance sheet support dividend policy
600
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
100
EMLIP Net EMBI GD SP 500
Cumulative monthly returns since October 1992 Source: Ashmore, Bloomberg, JP Morgan
Delivering strong investment performance for clients
AuM outperforming versus benchmark, gross 1 year annualised AuM outperforming versus benchmark, gross 3 years annualised AuM outperforming versus benchmark, gross 5 years annualised100%
100% 100% 100%
100%
91%
100%
100% 100%
88%
100%
100% 100% 100%
87%
86
57%
100%
%
80%
80%
85%
82%
80%
60%
71%
71%
60%
66%
60%
40%
40%
52%
40%
20%
20%
20%
External
Local
Corporate
Blended
Equities
Multi-asset
Group
External
Local
Corporate
Blended
Equities
Multi-asset
Group
External
Local
Corporate
Blended
Equities
Multi-asset
Group
0% 0% 0%
Outperforming Underperforming
Data as at 31 March 2017
Qualifying AuM has a relevant performance benchmark and a track record over the respective time period
Consistent three-phase strategy to capitalise on Emerging Markets growth trends
-
Establish Emerging Markets asset class
Ashmore today
Establish investment processes and asset classes
Provide access to Emerging Markets and their rapid development opportunities
Increase developed world investor allocations
Institutional investors underweight EM
Index representation is low
Ashmore recognised as a strong specialist EM manager
-
Diversify developed world capital sources and themes
Establish differentiated Emerging Markets investment themes and sub-themes
Diversify AuM by client location and client type (institutional and retail)
Develop new product structures and capabilities
Ongoing diversification of investment themes and client base
Retail business growing
New products performing well , e.g. short duration
- Mobilise Emerging Markets capital
Source capital from institutional investors, EM to EM
Build network of local asset management platforms to manage domestic capital
34% of AuM sourced from Emerging Markets
Rationalised network to focus on higher growth opportunities
Capacity to consider new local markets
Emerging Markets
Jan Dehn, Head of Research
The Emerging Markets outlook is very attractive
-
Long-term growth opportunity is strong and underpinned by the EM/DM convergence trade
GDP per capita in Emerging Markets is rising rapidly but is still 35 years behind Developed Markets
-
A powerful tactical opportunity has emerged as QE headwinds abate
asset prices inflated in Developed Markets
Emerging Markets prices impacted and growth slowed, but fundamentals held up extremely well
-
Emerging Markets value proposition is extremely strong
attractive real yields, cheap currencies and equity markets geared to accelerating GDP growth
returns likely to play out over multiple years
-
Risks to the positive outlook for Emerging Markets
systematic, idiosyncratic and external (DM)
-
Active management is essential
events in Developed Markets cause price reactions but no impact on fundamentals in Emerging Markets
Page 9
Page 10
Pages 11-17
Page 18
Page 19
Emerging Markets are increasingly important
EM's share of world GDP is high (58%) and rising
Yet EM has only a small proportion (20%) of the world's debt
Majority of the world's population (87%) resides in EM and has the potential to become wealthier
This means that the well-established EM/DM convergence trade has a lot further to runConvergence trade
GDP per capita, rebased 1980 = 100
1980
EM = US$1,500 DM = US$10,100
2016
EM = US$11,200 DM = US$47,400
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018f
2020f
2022f
Emerging Markets Developed Markets
Source: Ashmore, IMF
QE hurt EM local markets, but change is evident
Capital was withdrawn from Emerging Markets to chase QE trades in the developed world, e.g. long USD
Emerging Markets responded with significant macro-economic adjustments and reforms
USD strength is now harming the US economy and weaker USD policies are being pursued
Stronger EMFX starting to reflect cyclical recovery
Reducing QE influence
190
180
170
160
150
140
130
120
110
100
50
60
70
80
90
100
90
2010 2011 2012 2013 2014 2015 2016
110
Combined balance sheets of four QE central banks (lhs, indexed Dec 2010=100) USD-EMFX (rhs, indexed Dec 2010=100)
There is plenty of value in Emerging Markets yields
EM yields are comparable to those prevailing before the global financial crisis
QE and related policies in DM have pushed asset prices in those markets into bubble territory
Relative value is skewed strongly towards Emerging Markets
Nominal bond yields (%, with duration in brackets)
8.00
6.00
4.00
2.00
0.00
-2.00
-4.00
Fed funds
Germany 5 yr (4.8)
Germany 10yr (9.2)
US 5yr (4.7)
US 10yr (8.8)
EM index-weight yield (5.2)
-6.00
Change in yield/rate since end 2006 (%) Yield/rate today (%)
Real exchange rates are extremely competitive
EM currencies are at attractive levels and will benefit from weak USD policies
But there will also be impetus from strong
and improving EM fundamentals
EM countries will attract flows from underweight investors
financial conditions will ease after an imposed period of tightening
GDP growth will continue to pick up
spreads will narrow, reinforcing the trend
Biggest risk is US Border Adjustment Tax
EM real effective exchange rates since 1994
125
120
115
110
105
100
95
90
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
85
EM REER (GBI weighted) US REER
Ashmore Group plc published this content on 16 June 2017 and is solely responsible for the information contained herein.
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