Winners rationale

2018 was a challenging year for emerging markets which suffered disproportionately due to a tightening Fed, a stronger dollar, and escalating geopolitical issues. The adverse environment caused many related strategies to record both negative returns and net inflows. Yet, despite the overall risk-off investor sentiment and the brutal market meltdown, Ashmore Investment Management’s EM bond funds bucked the trend and drew robust capital inflows from its private banking clients.

Earlier in the year, Ashmore — which has focused exclusively on EMs since its founding in 1992 — observed that investors were shifting from long-dated bonds to short-term paper. One of the fund house’s flagship funds, an EM short duration strategy, benefited heavily from this trend and attracted strong inflows, with total AUM almost doubling from US$2.9 billion in early 2018 to US$4.9 billion as at end-September 2018.

“The Ashmore EM Short Duration Fund sets us apart from our competitors,” said Ashmore’s Michael Winter, head of business development, Asia Pacific ex-Japan.

“The low duration nature of the fund coupled with its focus on rigorous credit selection of short-dated high yielding paper contributed to the fund’s lower volatility amidst the challenging market conditions this year.”

Additionally, the firm made a number of astute tactical calls during the year which provided a buffer against volatility. When markets observed significant drawbacks with widening spreads, Ashmore increased its exposure to China, which it had rated underweight for the previous two years. Similarly, during Turkey’s currency crisis, the firm took the opportunity to buy the short-term paper of top-tier banks with solid balance sheets.

“With the turbulence from trade wars, some private banks are recognising that emerging market investments, especially equity, have been unfairly punished and could be a value play. As a one-stop shop for all emerging market investments, we have plans to deepen our offering into EM equity strategies,” Winter revealed.

Backed by a dedicated team of 92, Ashmore Investment Management’s deep coverage of over 60 EM countries and the success of its core strategies as evidenced by exceptional inflows from private banks earned it the title of Asian Private Banker’s Best Fund Provider – Emerging Market Bond.