Liontrust and Ashmore shares tumble as outflows mount

Shares in Liontrust and Ashmore have plummeted after asset managers signaled growing outflows as investors moved money out of riskier asset classes.

Ashmore, which focuses on emerging markets, said assets under management fell $1.8 billion to $55.9 billion (£42.6 billion) in the three months to the end of June after outflows of nearly $3 billion ( £2.2 billion).

“Some global macro uncertainty remains and so some investors reduced risk during the quarter,” said Ashmore chief executive Mark Coombs.

However, Coombs assured investors that emerging markets “continue to perform well, supported by improving fundamentals such as accelerating GDP growth, declining inflation and the potential for rate cuts, as well as the benefit of a weaker US dollar.”

Ashmore had positive investment income of $1.1 billion during the period, though this was more than offset by net outflows of $2.9 billion.

“The net outflow was primarily the result of top-down asset allocation decisions by institutional clients in the external debt theme and, to a lesser extent, in the mixed debt and local currency themes,” said Ashmore.

Ashmore shares fell nearly 7 percent to 202 pence, becoming the biggest faller on the FTSE 250 Friday morning.

The second biggest loser was Liontrust Asset Management, which also reported declining assets under management following an increase in outflows.

The London-based asset manager said assets under management as of this week were just £29bn, compared to £29.5bn at the end of June and £31.4bn at the end of March.

This was attributed to net outflows of £1.6 billion, while £294 million was lost to market and investment performance.

“In a risk-avoiding environment, our strong focus on equities has proven challenging, especially when the UK market is out of favour,” said CEO John Ions.

“This is evidenced by stocks that had net negative retail sales in the UK in 10 of the last 12 months to the end of May 2023, according to the Investment Association.”

Liontrust Asset Management Shares were down more than 6 percent on Friday morning to 665.50p.

However, the fund group said its business was “robustly sound” and that the proposed acquisition of Zurich-listed GAM would boost growth.

The £96m acquisition, backed by 84 per cent of shareholders last week, “will accelerate Liontrust’s strategic advancement and growth through its broader investment capacity and global distribution,” the group said.

But the deal is still facing some backlash, with a group of GAM minority shareholders this week unveiling a rival plan that it says will boost the value of the Swiss company by up to five times.

Liontrust’s growing outflows and current share price decline are likely to embolden the rebels of GAM investors NewGame and Bruellan, which own 9.5 percent of the fund manager’s shares.

Among their criticisms of the deal, the pair point to a “unilateral deal structure under which GAM shareholders will own only 12.5 percent of the combined entity and 40 percent of the [assets under management]’.

They also criticize Liontrust’s “track record as one of the worst-performing stocks in the fund management industry over the past 12-24 months.”