Ashmore Group Plc · LSE:ASHM
Ashmore — Investor Presentation (March 2022)
40 slides from Ashmore's investor presentation, March 2022
Slide 1: Ashmore Group plc Investor presentation March 2022
Ashmore Group plc Investor presentation March 2022 www.ashmoregroup.com
Slide 2: Contents
Contents Page Ashmore ‘at a glance’ 3 Three-phase growth strategy 4 Active investment processes 8 Distinctive business model 12 Focus on strategic initiatives 14 Remuneration philosophy 16 Strong balance sheet 17 Seed capital supports growth 18 Sustainability 19 Emerging Markets 20 Summary of recent
Slide 3: Ashmore 'at a glance'
Ashmore ‘at a glance’ • A specialist Emerging Markets manager with USD 87.3 bn AuM (31 AuM: diversified by investment theme & client type Dec 2021) diversified across asset classes Alternatives Equities 2% 9% External debt • Active investment management delivered by committee-based 21% investment pr
Slide 4: Three-phase growth strategy
Three-phase growth strategy • Developed world investors hold more than USD 80 trillion of assets and are profoundly underweight Emerging Markets; target allocations are less than 10% compared with global benchmark weights of approximately 10% to 30% • The Emerging Markets investment universe continu
Slide 5: Strategy phase 1: Establish Emerging Markets asset classes
Strategy phase 1: Establish Emerging Markets asset classes GDP per capita (indexed 1980 = 100) • Ashmore’s proven investment expertise, specialist focus and 2020 scalable distribution model mean it is well-placed to exploit EM = USD 11,600 the growth opportunities across Emerging Markets DM = USD 52
Slide 6: Strategy phase 2: Diversify assets under management
Strategy phase 2: Diversify assets under management • Ashmore’s established investment processes and broad AuM by client type & location distribution capabilities deliver diversified AuM growth Intermediary Foundations / retail endowments 6% 1% Central banks Funds / sub- advisers 13% 6% AuM developm
Slide 7: Strategy phase 3: Mobilise Emerging Markets capital
Strategy phase 3: Mobilise Emerging Markets capital • Investable capital pools in Emerging Markets are growing Established network of local asset management operations 2x faster than in Developed Markets • Ashmore’s local offices participate in this growth trend ˗ Strong organic growth opportunity i
Slide 8: Active investment processes
Active investment processes • Specialist, active investment management is required to exploit inefficiencies in Emerging Markets • Investment committees oversee experienced teams with collective responsibility for strategies in each theme ˗ No ‘star’ culture • 98 investment professionals covering gl
Slide 9: Investment themes
Investment themes Ashmore manages capital across a range of different investment themes with dedicated strategies under each theme providing either global Emerging Markets exposure or specific regional or country exposure. FIXED INCOME ALTERNATIVES (USD 77.8bn) (USD 1.5bn) EQUITIES (USD 8.0bn) Local
Slide 10: Investment performance (1/2)
Investment performance (1/2) One year: 39% outperforming Three years: 44% outperforming Five years: 54% outperforming 100% 100% 100% 90% 90% 90% 80% 80% 80% 70% 70% 70% 60% 60% 60% 50% 50% 50% 40% 40% 40% 30% 30% 30% 20% 20% 20% 10% 10% 10% 0% 0% 0% Jun’21: 96% Jun’21: 57% Jun’21: 79% Outperforming
Slide 11: Investment performance (2/2)
Investment performance (2/2) 1yr 3yr 5yr 31st December 2021 Ashmore Benchmark Ashmore Benchmark Ashmore Benchmark External debt Broad -4.7% -1.8% 3.6% 5.9% 3.3% 4.7% Sovereign -3.3% -1.8% 4.2% 5.9% 3.5% 4.7% Sovereign IG -1.8% -1.9% 8.1% 7.6% 6.3% 5.8% Local currency Bonds -8.6% -8.8% 2.3% 2.1% 3.3%
Slide 12: Distinctive business model
Distinctive business model Structural growth opportunities Creating value through the cycle Strong long-term investment performance for clients • Consistent investment philosophy since 1992 • Significant alpha delivered through market cycles Interests aligned through employee equity ownership • Vari
Slide 13: Delivering returns for shareholders through market cycles
Delivering returns for shareholders through market cycles • Financial performance driven by high-quality revenues and highly Profitability maintained through cycles flexible cost base 100% 70% 90% ˗ Strong bias to recurring management fee income 80% ˗ Disciplined control of operating costs 70% 65% ˗
Slide 14: Focus on strategic initiatives: 1. Equities
Focus on strategic initiatives 1. Equities • Large investment universe (USD 37trn), comparable to EMD Global strategies performance Alpha1 One year Three years Five years • Highly scalable all cap strategies underpin strategic objective to increase equity AuM (currently 9% of Group AuM) EM All Cap +
Slide 15: Focus on strategic initiatives: 2. Intermediary retail
Focus on strategic initiatives 2. Intermediary retail Diversified AuM • Capital sourced through intermediaries provides diversification UK, 26% • Typically more cyclical than institutional assets, but higher net revenue margin Americas, 39% • Dedicated distribution teams in US and Europe Europe (ex
Slide 16: Remuneration philosophy
Remuneration philosophy • Consistent philosophy aligned with cyclical profits and protects Clear link between pay and performance returns to shareholders through market cycles 100% • Applies to all Group employees, underpins strong team-based 80% culture and employee retention 60% • RemCo determines
Slide 17: Strong balance sheet & consistent cash generation
Strong balance sheet & consistent cash generation • Strong, liquid balance sheet benefits clients and Substantial, liquid financial resources shareholders through the cycle no debt Market risk 67% Credit risk 17% high-quality financial resources, >£800m Operational risk 16% 667.4 liquid assets
Slide 18: Seed capital supports growth
Seed capital supports growth • Seed capital investments support Ashmore’s growth: Substantial, liquid financial resources ˗ Create marketable investment track record 1,000 ˗ Establish new distribution channels 900 ˗ Provide additional scale to funds for intermediaries 800 ˗ Support initial developme
Slide 19: Sustainability
Sustainability Consistent, coherent approach across the Group Integrated approach across the Group • ESG Committee includes front office, middle office & support Corporate Responsible The Ashmore functions responsibility investment Foundation Ensure the firm is managed to Ensure investments are Phil
Slide 20: Emerging Markets
Ashmore Emerging Markets eee
Slide 21: Emerging Markets: Structural growth and investment opportunities in inefficient markets
Emerging Markets Structural growth and investment opportunities in inefficient markets • Growth underpinned by powerful economic convergence Emerging Markets’ increasing significance trends with the developed world • Large investment universe, set to grow further 84% 58% ˗ USD 71trn in equities and
Slide 22: Emerging Markets: Diversification
Emerging Markets Diversification • Diverse equity & fixed income asset classes representing Large and diverse benchmark indices more than 70 countries Index Value Countries Issuers ˗ No country is more than 5% of EMBI GD (US$bn) ˗ GBI-EM GD country weights capped at 10% EMBI GD 1,365 72 172 GBI-EM G
Slide 23: Emerging Markets: Active versus passive investing
Emerging Markets Active versus passive investing Large investment universe, low index representation • EM fixed income and equity markets are inefficient Benchmark indices are unrepresentative of the US$37.0trn US$34.1trn 22% investment opportunity 17% Active management is critical • Structural
Slide 24: Assessing the Emerging Markets cycle
Assessing the Emerging Markets cycle • Effective policy responses to pandemic Positive outlook as 2021 headwinds fade ˗ EM required less fiscal stimulus and consolidating deficits Macro topic 2021 2022 outlook faster than DM US rates Uncertainty, misguided fear Expected rate increases will ˗ EM long
Slide 25: Historical valuations relative to Developed Markets
Historical valuations relative to Developed Markets External debt Local currency Index: 72 countries, 172 issuers, 961 bonds Index: 20 countries, 20 issuers, 293 bonds 800 EMBI GD spread over UST, bps 8.00 GBI-EM GD yield (%) Difference: GBI-EM vs GBI global (%) 7.50 700 7.00 600 6.50 6.00 500 5.50
Slide 26: Summary of recent financial performance
Ashmore Group plc Summary of recent financial performance
Slide 27: Financial performance overview: H1 2021/22
Financial performance overview: H1 2021/22 • AuM -8% over six months H1 2021/22 H1 2020/21 £m £m YoY % Net flows -US$3.2 billion AuM (US$bn) 87.3 93.0 (6) Negative investment performance -US$3.9 billion Adjusted net revenue 138.2 156.8 (12) • Adjusted net revenue -12% Adjusted operating costs (4
Slide 28: Assets under management
Assets under management AuM development (US$bn) • Gross subscriptions of US$7.8 billion, 8% of opening AuM (H1 2020/21: US$7.5 billion, 9%) (3.9) Broad-based demand across themes (2.2) (1.0) New mandates in external debt, blended debt & equities Flows into sovereign IG and Asia-focused corpora
Slide 29: Quarterly net flows
Quarterly net flows +8.0 +6.0 +4.0 +2.0 USD billion +0.0 -2.0 -4.0 -6.0 -8.0 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 29
Slide 30: Revenues
Revenues • Adjusted net revenue -12% YoY Adjusted net revenue (£m) 156.8 (7.9) • Net management fees -6% (4.6) (6.1) Average AuM +4% YoY offset by higher average GDP:USD 138.2 • Net management fee margin 39bps (-3bps YoY / -1bp HoH) Movement primarily due to retail & mutual fund flows (-2bps)
Slide 31: Operating costs
Operating costs • Adjusted operating costs reduced by 7% YoY Adjusted operating costs (£m) 51.2 0.3 (3.7) 47.8 • Non-VC operating costs increased by 1% ˗ Disciplined control of all operating costs ˗ Average headcount stable YoY ˗ Limited travel and remote working, but restrictions starting to ease •
Slide 32: Seed capital
Seed capital Seed capital movement (£m) • Total value of seed capital programme ~£345 million 336.8 40.1 6.1 32.0 334.8 ˗ Market value of £334.8 million (30 June 2021: £336.8 million) ˗ Undrawn commitments of £8.5 million • P&L gain of £25.2 million (H1 2020/21: £49.3 million), predominantly unreali
Slide 33: Cash flow
Cash flow • Operations generated cash flow of Cash flow (£m) (1) £84.8 million (1) 92% of adjusted EBITDA 13.0 84.8 (H1 2020/21: 83%) 86.8 1.2 6.7 445.7 25.8 34.0 437.7 444.4 • Consistent uses of operating cash flow: ˗ Corporation tax ˗ Ordinary dividends to shareholders ˗ Share purchases to satis
Slide 34: Balance sheet
Balance sheet • Capital resources of £823.3 million (1) Consistent balance sheet structure ˗ Excess regulatory capital of £667.4 million, 900 800 equivalent to 94p/share 700 ˗ No debt 600 500 400 • Balance sheet remains highly liquid (76%) 300 £444.4 million cash & cash equivalents (2) 200 100 £
Slide 35: Net management fee margins
Net management fee margins 141 H1 2020/21 H2 2020/21 H1 2021/22 134 123 63 61 59 47 47 47 42 40 43 39 39 37 39 38 36 30 28 27 Group External debt Local currency Corporate debt Blended debt Equities Alternatives Fixed income: 36bps (H1 2020/21: 39bps) (H2 2019/20: 37bps) 35
Slide 36: Foreign exchange
Foreign exchange • Sterling weakened against the US dollar over the period, but Currency exposure of cash(1) average rate was stronger YoY 31 December 2021 % 30 June 2021 % Period-end rate moved from 1.3815 to 1.3545 £m £m US dollar 284.7 64 341.3 77 Average rate 1.3636 vs 1.3107 in H1 2020/21 S
Slide 37: Appendix
Ashmore Appendix eee
Slide 38: Disclosures
Disclosures Page 10: - Gross performance is shown, weighted by fund AuM, to provide a representative view to analysts and shareholders of Ashmore’s investment performance over relevant time periods - Only funds at 31 December 2021 and with a performance benchmark are included, which specifically exc
Slide 39: Disclaimer
Disclaimer IMPORTANT INFORMATION This document does not constitute an offer to sell or an invitation to buy shares in Ashmore Group plc or any other invitation or inducement to engage in investment activities. Certain statements, beliefs and opinions in this document are forward-looking, which refle
Slide 40: Investor relations contact
Investor relations contact Paul Measday Telephone: +44 (0) 203 077 6278 Email: paul.measday@ashmoregroup.com Website: ir.ashmoregroup.com 40