This FTSE 250 stock first caught my attention in the early days of my investing life. Around 15 years ago, I was tempted to buy emerging market-focused investment manager Ashmore Group (LSE: ASHM). The BRICs were in fashion as investors felt Brazil, Russia, India and China were about to reshape the global economy.
That didn’t quite pan out. The 2008 financial crisis began in the West but hit emerging markets hard. Since then, progress has been patchy. While China and India have battled on, Latin America has been inconsistent and Russia is cut off from Western finance. Overall, returns haven’t kept pace with expectations.
That’s been a major drag on Ashmore. Its shares now trade at a 10-year low. Over five years, they’re down a brutal 65%, including a 24% fall over the last 12 months alone.
In March, there was a brief flicker of optimism. Broker UBS upgraded the stock to from Neutral to Buy, nudging its price target up to 180p (it’s just under 144p today). UBS pointed to improving fund flows, investor rotation away from US markets, and an appealing valuation.
Hopes of a recovery dashed
It also highlighted that institutional allocations to emerging market debt and equities were at multi-decade lows, but that inflows could soon return. The feelgood factor didn’t last.
A month later, Ashmore revealed a fresh round of institutional redemptions. Assets under management fell 5% in Q1 2025 to $46.2bn. Despite a positive investment performance of $1.3bn, the firm saw $3.9bn pulled out.
The board insisted this wasn’t part of a broader trend and said interest in its strategies remains healthy. It also suggested that growing stock market volatility, a weaker dollar and shifts in global fiscal policy could lift emerging markets in the months ahead. Hope springs eternal.
Yet it’s true that the strong US dollar has inflicted pain on developing countries for years, with many weighed down by dollar-denominated debt. If inflation cools and interest rates ease, Ashmore’s portfolio performance could improve. Those remain big ‘ifs’ though.
Ashmore pays a mighty dividend
The valuation now looks low, with the shares trading on a price-to-earnings ratio just over 10. That potentially offers scope for growth, if we get it.
While waiting, investors can pocket a huge dividend. The yield’s a striking 12%. Of course, that comes with risk. The dividend has been frozen at 16.9p for the last four years and inflation has taken a bite out of its real value. Still, it hasn’t been cut, which is something.
The 10 analysts currently offering 12-month price forecasts have pencilled in a median target of 152.6p. If correct, that’s a modest 6% rise from today. Combined with the dividend, the potential total return edges up to 18%. Not bad, if everything goes to plan. There’s an awful lot of ‘ifs’ in this article though.
Forecasts are rarely reliable even in calm markets, never mind during today’s turbulence. Dividends can be cut too. Having looked at the stock closely, the valuation, yield and long-term emerging markets story are enticing.
But after years as a potential recovery story, I think only bold and brave long-term investors should consider buying Ashmore today.
