Ashmore Group plc · LSE:ASHM
Ashmore — Investor Presentation (March 2024)
38 slides from Ashmore's investor presentation, March 2024
Slide 1: Ashmore Group plc Investor presentation
Ashmore Group plc Investor presentation March 2024 www.ashmoregroup.com
Slide 2: Contents
Contents Ashmore Group plc Page Emerging Markets Page Ashmore ‘at a glance’ 3 Superior growth 18 Capitalising on the Emerging Markets opportunity 4 Structural reforms 19 Three-phase growth strategy 5 Diversification provides opportunities 20 Active investment processes 9 Active vs passive investing
Slide 3: Ashmore 'at a glance'
Ashmore ‘at a glance’ • A specialist Emerging Markets manager with USD 54.0 bn AuM AuM: diversified by investment theme & client type (31 December 2023) diversified across asset classes Alternatives, 3% External debt, Equities, 12% 17% • Active investment management delivered by committee-based inve
Slide 4: Capitalising on the Emerging Markets opportunity
Capitalising on the Emerging Markets opportunity Emerging Markets offer superior growth, supported by reforms and diversification • Superior GDP growth vs Developed Markets • Structural reforms support growth & provide resilience • Diversification with more than 70 emerging countries • Dominant shar
Slide 5: Three-phase growth strategy
Three-phase growth strategy • Developed world investors hold more than USD 100 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 contin
Slide 6: Strategy phase 1: Establish Emerging Markets asset classes
Strategy phase 1: Establish Emerging Markets asset classes Convergence: GDP per capita (indexed 1980 = 100) • Ashmore’s specialist focus means it is well-placed to exploit the significant growth potential as emerging nations develop 2023 EM = US$15,250 DM = US$66,000 • Large investable markets acros
Slide 7: Strategy phase 2: Diversify assets under management
Strategy phase 2: Diversify assets under management AuM development (USD bn) • Diversification mitigates impact of cyclical factors on 100 revenues, and includes asset classes, products and 90 clients (type & location) 80 • Focus on increasing scale of equities & alternatives 70 AuM, and growing IG
Slide 8: Strategy phase 3: Mobilise Emerging Markets capital
Strategy phase 3: Mobilise Emerging Markets capital • Investable capital pools in Emerging Markets are growing faster Established network of local asset management platforms (AuM) than in Developed Markets • Broad-based, strong AuM growth, +12% in H1 2024 to US$7.8 billion (14% of Group AuM) US$1.7b
Slide 9: 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 • ~100 investment professionals covering
Slide 10: 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 (US$45.9bn) (US$1.6bn) EQUITIES (US$6.5bn) Local Co
Slide 11: Strong recent performance in Emerging Markets
Strong recent performance in Emerging Markets • Emerging Markets rally began in late 2022, and was underpinned in Asset class returns late 2023 by Fed signaling peak rates 6m to Since ‒ Fixed income has outperformed Developed Markets 31 Dec 2023 30 Sep 2022 ‒ Equities has lagged due to China, other
Slide 12: Investment performance
Investment performance One year: 61% outperforming Three years: 56% outperforming Five years: 62% 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% June 2023: 67% June 2023: 69% June 2023: 49% Outperformi
Slide 13: Investment performance
Investment performance 1yr 3yr 5yr 31st December 2023 Ashmore Benchmark Ashmore Benchmark Ashmore Benchmark External debt Broad 14.1% 11.1% -5.3% -3.6% -0.2% 1.7% Sovereign 22.1% 11.1% -1.7% -3.6% 2.1% 1.7% Sovereign IG 7.6% 7.1% -4.5% -5.6% 2.3% 1.4% Local currency Bonds 16.7% 12.7% -0.5% -3.2% 2.9
Slide 14: Remuneration philosophy aligns interests
Remuneration philosophy aligns interests • 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% •
Slide 15: Delivering returns for shareholders through market cycles
Delivering returns for shareholders through market cycles • High-quality revenues and flexible cost base Substantial & liquid financial resources ˗ Strong bias to recurring management fee income ˗ Disciplined control of operating costs ˗ Profit-based variable remuneration ˗ Relatively high operating
Slide 16: Sustainability
Sustainability Approach to sustainability centred on three pillars Consistent, coherent approach across the Group • ESG Committee oversees implementation of all ESG and responsible investment issues; includes front office, middle office & support functions; reports to the plc Board Corporate • Premi
Slide 17: Emerging Markets
Ashmore Emerging Markets eee
Slide 18: Superior growth supported by reforms & diversification
Superior growth supported by reforms & diversification • Superior growth delivered by powerful economic Emerging Markets’ superior growth & dominant share of resources convergence trends with the developed world 8 6 • Emerging Markets have a dominant share of 4 GDP growth (%) economic resources, but
Slide 19: Structural reforms
Structural reforms • Most important development of past few decades is the Structural shift to local currency funding (US$trn) shift from external to local currency funding 20 ‒ Supported by improvements in quality & effectiveness 18 of monetary & fiscal policymaking, and 16 ‒ Growth in institutiona
Slide 20: Diversification provides opportunities
Diversification provides opportunities • 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 1,180 69 161 GB
Slide 21: Active versus passive investing
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$39.1trn 16% US$37.2trn investment opportunity 15% − Active management is critical • Structural developments, e.g
Slide 22: Historical index valuations relative to Developed Markets
Historical index valuations relative to Developed Markets External debt Local currency Index: 69 countries / 161 issuers / 944 bonds Index: 20 countries / 20 issuers / 337 bonds 800 8.00 EMBI GD spread over UST, bps GBI-EM GD yield (%) Difference: GBI-EM vs GBI global (%) 700 7.00 600 6.00 500 5.00
Slide 23: Positive outlook for Emerging Markets
Positive outlook for Emerging Markets • Outlook underpinned by: Long-term view of US rates (%) − Superior GDP growth 8 7 − Inflation challenges addressed, cutting policy rates as inflation falls 6 − Less fiscal stimulus to unwind vs DM 5 4 − Peak Fed rates implies peak USD 3 2 1 • Significant alloca
Slide 24: Summary of recent financial performance: H1 2024
Ashmore Group plc Summary of recent financial performance: H1 2024
Slide 25: Financial performance overview
Financial performance overview • Adjusted net revenue -13% H1 2024 H1 2023 ‒ Performance fees doubled to £8.0m £m £m YoY ‒ Lower AuM levels and FX impact - net revenue 93.4 107.7 -13% - operating costs (52.3) (46.2) 13% • Adjusted operating costs +13% ‒ Non-VC costs +2% HoH Adjusted EBITDA 42.6 63.2
Slide 26: Assets under management
Assets under management • AuM stabilising AuM development (US$bn) ‒ Performance +US$2.6 billion (H1 2023: +US$0.8 billion) 2.9 ‒ Net outflows of -US$4.5 billion (H1 2023: -US$7.6 billion) 3.9 ‒ Q2 significantly better than Q1 1.3 1.6 • Subscriptions US$3.0 billion, 5% of opening AuM (H1 2023: US$4.3
Slide 27: 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 FY23 FY24 27
Slide 28: Revenues
Revenues • Net management fees -16% YoY H1 2024 H1 2023 − Average AuM -10% £m £m YoY − 1bp decline in net management fee margin Net management fees 82.6 98.0 -16% − Higher average GBP:USD rate Performance fees 8.0 3.7 +116% Other revenues 1.7 1.3 +31% • Lower FX hedge gains FX: hedges 1.1 4.7 -77% A
Slide 29: Operating costs
Operating costs • Staff costs increased 3% YoY and 2% HoH H1 2024 H1 2023 ‒ Full period effect of wage inflation £m £m YoY ‒ Offset by lower average headcount Staff costs (16.1) (15.6) -3% Other operating costs (12.5) (11.0) -14% • Other operating costs +14% YoY and +2% HoH D&A (1.5) (1.7) +12% ‒ Pr
Slide 30: Seed capital
Seed capital • Total value of c.£300m comprises: H1 2024 H1 2023 ‒ Market value of investments (£288.3 million) £m £m ‒ Commitments (£9.7 million) - realised profit 3.1 0.8 - unrealised MTM profit/(loss) 16.5 (17.3) • Successfully recycled £22.6 million from funds in alternatives, local currency Tot
Slide 31: Other P&L items
Other P&L items • Higher interest income H1 2024 H1 2023 £m £m YoY ‒ Cash rolled onto higher market rates Interest income 12.8 6.5 +97% ‒ Average yield of >5% vs 2.5% in H1 2023 Profit before tax 74.5 53.8 +38% • Effective tax rate 19.2%, lower than UK rate of 25.0% Tax (14.3) (9.5) -51% ‒ Geographi
Slide 32: Generation & uses of cash
Generation & uses of cash • Consistent conversion of operating profits Cash flow1 ‒ Operating cash flow of £40.2 million represents 94% of adjusted EBITDA 40.2 9.8 88.0 468.3 11.1 445.7 0.2 445.9 35.9 • Operating cash flow supports returns to shareholders 12.0 and allows investment for future growth
Slide 33: Average net management fee margins
Average net management fee margins 161 148 H1 2023 H2 2023 H1 2024 140 60 56 55 44 44 43 40 39 36 34 32 30 32 29 28 28 29 26 Group External debt Local currency Corporate debt Blended debt Equities Alternatives Fixed income: 33bps (H1 2023: 34bps) (H2 2023: 32bps) 33
Slide 34: Foreign exchange
Foreign exchange • GBP:USD rate Currency exposure of cash and deposits(1) − Period-end rate moved from 1.2714 to 1.2748 31 December 2023 % 30 June 2023 % £m £m − Average rate 1.2572 vs 1.1795 in H1 2023 US dollar 115.3 26 62.7 13 Sterling 296.7 67 374.0 80 • P&L FX effects in H1 2024: Other 33.9 7 3
Slide 35: Appendix
Ashmore Appendix eee
Slide 36: Disclosures
Disclosures Page 12: - 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 2023 and with a performance benchmark are included, which specifically exc
Slide 37: 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 38: Investor relations contact
Investor relations contact Paul Measday Telephone: +44 (0) 203 077 6278 Email: paul.measday@ashmoregroup.com Website: ir.ashmoregroup.com 38