Ashmore Group (LSE:ASHM) earnings and assets under management slumped in the year to June, as inflation and the war in Ukraine reduced "risk appetite" for emerging markets assets in the second half.
Assets under management declined 32% year-over-year to US$64.0bn in the 12 months to 30 June, as a result of negative investment performance of US$16.6bn and net outflows of US$13.5bn.
The emerging markets investment manager attributed this to "widespread risk aversion due to Ukraine war, inflation and higher rates globally".
Rising US interest rates are often thought to be bad news for emerging market economies as they are seen as increasing the debt burden and triggering capital outflows.
With the Russian invasion of Ukraine exacerbating geopolitical and macroeconomic pressures, the past 12 months have been challenging, said FTSE 250-listed Ashmore.
But the company noted an improvement in the outlook for emerging markets.
"While the global macro environment still presents some near-term uncertainty, the situation in emerging markets is improving and the breadth of investment opportunity helps to mitigate the risks," said Mark Coombs, chief executive.
"Risk appetite will improve as some of the recent macro headwinds abate, supporting a recovery in emerging markets asset prices and higher investor allocations."
The FTSE 250-listed group said full-year adjusted net revenue of £257.2mln was 13% lower year-over-year, while underlying profit (adjusted EBITDA) declined 16% to £164.3mln.
The asset manager said statutory pre-tax profit declined by 58% to £118.4mln as a consequence of the "decline in adjusted EBITDA", and the impact of weaker markets affected the mark-to-market valuation of the group's seed capital investments.
The seed capital loss of £49.9mln for the period is unrealised, but was the primary reason for the slump in statutory profit, the company added.
It recorded net management fees of £243.5mln and performance fees at £4.5mln for the year to June.
Shares rose 5.4% to 204.6p by mid morning.
Broker Peel Hunt said the results were "broadly as expected", the reduction in EBITDA being "a decent result against the material decline in assets".
"There remains many reasons for longer term optimism, albeit there are still clear shorter term uncertainties. A strong balance sheet and close to 9% dividend yield offer some short-term compensation."