Ashmore Group plc · LSE:ASHM
Ashmore — Investor Presentation (November 2021)
42 slides from Ashmore's investor presentation, November 2021
Slide 1: Ashmore Group plc Investor presentation November 2021
Ashmore Group plc Investor presentation November 2021 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 91.3 bn AuM (30 AuM: diversified by investment theme & client type Sep 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 Foundations / Intermediary retail endowments 8% 1% Central banks Funds / sub- 11% advisers AuM development
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 • 99 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 82.0bn) (USD 1.5bn) EQUITIES (USD 7.8bn) Exter
Slide 10: Investment performance (1/2)
Investment performance (1/2) One year: 96% outperforming Three years: 57% outperforming Five years: 79% 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’20: 9% Jun’20: 17% Jun’20: 74% Outperforming U
Slide 11: Investment performance (2/2)
Investment performance (2/2) 1yr 3yr 5yr 30th September 2021 Ashmore Benchmark Ashmore Benchmark Ashmore Benchmark External debt Broad 7.1% 4.4% 4.1% 5.7% 3.5% 3.9% Sovereign 4.8% 4.4% 4.0% 5.7% 3.0% 3.9% Sovereign IG -0.1% -0.1% 7.4% 7.0% 5.0% 4.5% Local currency Bonds 4.5% 2.6% 3.5% 3.7% 2.7% 2.1%
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 to 20%-30% of Group AuM (9% currently) E
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, 21% • Typically more cyclical than institutional assets, but higher net revenue margin Americas, 45% • 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, >£750m Operational risk 16% 609.2 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: three pillars of sustainability • ESG Committee includes front office, middle office & support functions Corporate • Premium listing on London Stock Exchange • UNPRI signatory since 2013 • Annual commitment to society
Slide 20: Emerging Markets
Ashmore Emerging Markets eee
Slide 21: Emerging Markets: Structural growth and investment opportunities
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 1,373 72 171 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$30.7trn US$29.6trn investment opportunity 13% 19% Active management is critical • Structural
Slide 24: Supportive environment for continued EM performance
Emerging Markets outlook • Vaccination programmes support economic and social recovery Attractive valuations: lower equity PERs and higher real yields ˗ Significant acceleration in EM, in aggregate, over past six 28 60% months 26 50% 24 22 40% • Emerging countries are in stronger post-pandemic posit
Slide 25: Emerging Markets and Fed taper: then and now
Emerging Markets and Fed taper: then and now 10-year US rates: nominal, real and break-even inflation (%) • US rates will rise as economy exits recession, mostly driven by 3.50 1.50 rising inflation expectations 3.00 1.00 • Several factors suggest no need for a repeat of the 2013 ‘taper 2.50 0.50 ta
Slide 26: Historical valuations relative to Developed Markets
Historical valuations relative to Developed Markets External debt Local currency Index: 72 countries, 171 issuers, 955 bonds Index: 20 countries, 20 issuers, 292 bonds 800 8.00 EMBI GD spread over UST, bps GBI-EM GD yield (%) Difference: GBI-EM vs GBI global (%) 7.50 700 7.00 600 6.50 6.00 500 5.50
Slide 27: Recent financial performance
Ashmore Group plc Recent financial performance
Slide 28: Financial performance overview
Financial performance overview • AuM +13% YoY, average AuM flat YoY FY2020/21 FY2019/20 £m £m YoY % Net flows +US$1.2 billion and positive investment performance +US$9.6 billion AuM (US$bn) 94.4 83.6 13 Adjusted net revenue 296.6 325.0 (9) • Q1 2021/22 AuM US$91.3 billion ˗ Net outflows of US$1.0
Slide 29: Financial results: Assets under management
Financial results Assets under management • Strong markets and investment outperformance AuM development (US$bn) added US$9.6 billion • Subscriptions of US$17.6 billion, 21% of opening 9.6 4.1 (2.9) AuM (FY2019/20: US$24.3 billion) Broad-based demand across all fixed income and equity themes New
Slide 30: Financial results: Assets under management
Financial results Assets under management AuM by theme (US$bn) AuM as invested (US$bn) External debt 0.3 12.8 18.2 12.8 Local currency External debt 1.4 1.3 Corporate debt 30.4 Local currency 7.4 7.7 Blended debt Corporate debt Equities Equities 19.6 Alternatives 18.1 Alternatives 23.4 Multi-asset O
Slide 31: Financial results: Quarterly net flows
Financial results 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 31
Slide 32: Financial results: Revenues
Financial results Revenues • Adjusted net revenue fell by 9% (3% at constant currency) Adjusted net revenue bridge (£m) 325.0 (44.6) • Net management fees -14% (-8% at constant currency) 8.2 296.6 8.0 Broadly flat average AuM (US$90.0bn) 4bps decline in net management fee margin Higher average
Slide 33: Financial results: Operating costs
Financial results Operating costs • Non-VC operating costs reduced by 6% (2% at Adjusted operating costs (£m) constant currency) 105.9 -1% +1% -2% 103.7 ˗ Flat average headcount, lower travel and office- related expenses ˗ Charitable contribution: 0.5% of profits* paid to Ashmore Foundation and othe
Slide 34: Financial results: Seed capital
Financial results Seed capital Seed capital movement (market value, £m) 134.6 • Total seed capital exposure of ~£345 million 106.0 69.8 336.8 market value £336.8 million (30 June 2020: £238.4 million) undrawn commitments of £8.9 million 238.4 • Net P&L gain of £92.5 million (FY2019/20: £7.6 mill
Slide 35: Financial results: Cash flow
Financial results Cash flow • Consistently high conversion of profits Cash flow (£m) (1) to cash flow Operating cash flow of £213.1 million (1) represents 109% of 213.1 64.3 adjusted EBITDA (FY2019/20: 121.2 116%) 23.3 6.8 2.2 490.1 485.4 39.7 445.7 • Cash flow provides for: ˗ Corporation tax ˗ Or
Slide 36: Financial results: Balance sheet
Financial results Balance sheet • Capital resources of £765.1 million (1) Consistent balance sheet structure 900 ˗ Excess regulatory capital of £609.2 million, 800 equivalent to 85p/share 700 600 • Pillar II regulatory capital requirement of 500 £155.9 million 400 300 ˗ Increased 6% due to higher ma
Slide 37: Financial results: Foreign exchange
Financial results Foreign exchange • Sterling strengthened against the US dollar over the period Currency exposure of cash(1) Period-end rate moved from 1.2356 to 1.3815 30 June 2021 % 30 June 2020 % £m £m Average rate 1.3472 vs 1.2637 in FY2019/20 US dollar 341.3 77 380.5 78 Sterling 76.0 17 66
Slide 38: Management fee margins & revised AuM disclosure
Financial results Management fee margins & revised AuM disclosure FY2019/20 FY2020/21 FY2020/21 AuM Margin AuM Margin AuM Margin Old theme US$bn (bps) US$bn (bps) New theme / asset class US$bn (bps) External debt 17.1 41 18.2 39 External debt 18.7 38 Local currency 18.7 38 19.6 35 Local currency1 31
Slide 39: Appendix
Ashmore Appendix eee
Slide 40: Disclosures
Disclosures Page 14: - 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 30 June 2021 and with a performance benchmark are included, which specifically exclude
Slide 41: 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 42: Investor relations contact
Investor relations contact Paul Measday Telephone: +44 (0) 203 077 6278 Email: paul.measday@ashmoregroup.com Website: ir.ashmoregroup.com
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