At a massive 13%, Ashmore Group (LSE: ASHM) has the second-highest yield on the FTSE 250. A yield like that could make a great addition to a passive income portfolio.
Yet the stock has tanked more than 64% over the past five years. That’s concerning but also means the current price looks notably cheap. At 127p, it’s near the lowest it’s been in over 15 years.
But before diving in, I need to assess its prospects. If it recovers, it could be a great opportunity for value investors to secure lucrative returns. If it keeps dipping, it may fade into obscurity.
Let’s see what led to the decline and whether the stock is worth considering.
Emerging markets
Ashmore’s performance over the past five years is closely tied to emerging markets, which can be subject to significant volatility due to geopolitical and economic factors. This is most likely the reason for the significant decline it has suffered since Covid in 2020. While the emerging economies of Latin America, Africa and Asia continue to struggle, so will Ashmore.
In particular, currency devaluation in Türkiye and Argentina has had an impact on the stock. Rising inflation and interest rates have also contributed, along with the conflict in Ukraine and China-US trade tensions. Until these issues subside, its chances of recovery could be dampened.
The effects of these issues are also evident in the company’s financial results.
2025 first half results
In the first fiscal half of 2025, the company reported a 16% decline in revenue to £77.5m and a 36% drop in net income to £37.1m (compared to H1 2024). Earnings per share also decreased to 5.5p from 8.7p.
Prior to recent challenges, Ashmore’s assets under management (AUM) were improving. In 2024, they rose by $2.5bn, to $51.8bn – a 5% quarter-on-quarter improvement. The growth was attributed to factors such as a weakening US dollar, improved macroeconomic conditions and Chinese fiscal stimulus plans.
But the latest quarter wiped all that out as trade tensions prompted asset reallocations. As of 31 March 2025, AUM had dropped to $46.2bn, led by a 6% decrease in Fixed Income AUM and a 3% decline in Equities. These outflows were slightly offset by a 7% increase of inflows into Alternatives.
Considerations
With little evidence to support a price recovery in the short term, dividends remain Ashmore’s main draw. The company has a fairly decent dividend track record, with no cuts or reductions.
However, the full-year dividend has remained at 16.9p for the past four years, meaning it has lost value to inflation. It’s also worth noting that if profits continue declining, it may struggle to maintain payments and could be forced to make a cut.
On the flip side, history (and logic) dictate that global markets will eventually recover. With a below-average price-to-earnings (P/E) ratio of only 12.1, Ashmore should have decent room to grow.
However, it could be a while before that happens. Dividend-focused investors may be wise to keep the stock in mind and consider it when things begin to improve.
