The chief executive of Ashmore Group, Mark Coombs, expresses optimism that anticipated interest rate cuts in the United States will improve investor sentiment, potentially reversing a trend of significant client withdrawals from the firm, which specializes in emerging markets.

The group’s assets under management have decreased dramatically, falling from nearly $100 billion in 2019 to approximately $49.3 billion. This decline can be attributed to client outflows as investors have become wary of bonds and equities in emerging markets.

Coombs believes a turning point may be approaching. He indicated that potential interest rate cuts by the US Federal Reserve, along with clarity regarding the upcoming US presidential election, could rekindle interest in developing market assets.

“The emerging markets continue to perform well,” stated Coombs, age 64. “For capital flows to react more strongly to this positive environment, some short-term uncertainties need to be clarified for investors.”

He added, “Certain factors, including the next phases of the Fed’s rate cycle and the results of the US election, will become clearer in the coming months. Consequently, as this latent demand is released, we can anticipate a rise in investor interest in emerging markets through the latter half of 2024 and into 2025.”

Founded 25 years ago when Coombs led a management buyout of ANZ’s emerging markets bond division, Ashmore has evolved into a prominent player in niche investment markets. The company went public on the London Stock Exchange in 2006, which significantly benefitted its founder.

However, in recent years, Ashmore has faced challenges as demand for emerging markets investments has weakened due to rising interest rates in the United States, concerns over slowing growth in China, and geopolitical tensions stemming from Russia’s invasion of Ukraine. Over the last year, clients withdrew a net total of $8.5 billion from the firm, following net outflows of $11.5 billion in the prior year and $13.5 billion in 2022.

Despite these challenges, market gains contributed an additional $2.1 billion during the last financial year, and approximately 60% of the firm’s assets outperformed their respective benchmarks over the past three to five years. Performance fees increased significantly, rising to £22.7 million from £5.1 million the previous year, which contributed to a 15% growth in the company’s annual pre-tax profit, totaling £128.1 million.

Shares in Ashmore, part of the FTSE 250, experienced a slight increase, closing up by 1.5 pence or 0.9% at 174.5 pence.