Ashmore cuts outflows by 32% as investors turn away from US

(Sharecast News) - Emerging market specialist Ashmore reported a large cut in annual outflows as investors started to turn away from US investments amid global turmoil cause by President Donald Trump's trade war. Net outflows for the year to June fell by 32% to $5.8bn. Assets under management were 3% lower at $47.6bn, resulting in a 15% decline in pre-tax profit to £108.6m for the year to June 30.

"The global macro environment remains complex, notably with the impact of US policies and geopolitical risks including conflicts," the company said on Friday.

"However, several themes are evident and point to the need for investors to rebalance allocations away from the US and to other regions, and particularly to emerging markets, in order to position for higher risk-adjusted returns over the medium term."

"World economic growth is biased to emerging markets, with all regions expected to grow faster than developed markets over the next few years; and aggregate annual growth of between 2% and 3% is approximately twice as fast as expected in developed markets."

"US exceptionalism is being questioned as a result of overvalued capital markets, institutional deterioration and policy divergence. This will have many consequences, but possibly the most significant one from an allocation perspective is the weaker US dollar."

"This is already undermining returns for foreign investors in the US markets, and enhancing returns for investors in local currency bond and equity markets."

Reporting by Frank Prenesti for Sharecast.com