Charlemagne says LatAm, Asia inflows save it from EMEA withdrawals

Charlemagne says LatAm, Asia inflows save it from EMEA withdrawals

	Published : Tue, 10 Jul 2007 15:08 By : Agencies Print this Story

LONDON (Thomson IM) - Charlemagne Capital Ltd, which this morning reported a 10 pct increase in assets under management over the first half, said a sustained appetite for its Latin American and Asian products has helped counter net outflows from products focused on eastern Europe, the Middle East and Africa (EMEA).

The outflows sparked a drop in management fees. The emerging markets fund specialist said net management fees dropped to 18.9 mln usd for the first six months, compared to 20.9 mln usd during the same period last year 'primarily due to higher monthly average AuM in the first half of 2006.'

Performance fees though made up the shortfall amid positive developments in emerging stock markets, reaching 50.4 mln usd compared with 27.1 mln usd for the first half of 2006.

The firm said the last year has been characterised by 'an unusual disparity between the underlying market performance and fund flows.' As an example it noted that in the twelve months to May 31, the MSCI Global Emerging Markets Index rose 35 pct, while there were very low net inflows of 700 mln usd in a sector worth 540 bln usd.

In line with the industry, Charlemagne said it has experienced net flows into Asian and Latin American funds, but overall assets under management have been impacted by industry outflows from EMEA.

'This is particularly the case for the lower margin white label East Europe accounts,' it said in a statement.

The hedge fund and specialist emerging markets equity investment manager reported a 9.8 pct rise in assets under management in the first half to July 2 at 5.1 bln usd. At the same last year, the figure stood at 4.0 bln usd.

Sluggish inflows weren't helped by bouts of risk aversion, notably in late February and early March when emerging stock markets saw a marked correction on the back of fears that further tightening of US monetary policy could jeopardise continued global expansion, and rising property markets.

However, Charlemagne said 'an essentially benign economic and political backdrop, together with growth in corporate profits,' had seen emerging stock markets record positive results over the first half.

Charlemagne said the strong performance in Latin America spurred an increase in the number of IPOs, which helped drive the flow of funds into the region. It added that the Chinese stock market saw significant volatility but underlying investor sentiment remains firm.

The hedge fund manager said it has raised 205 mln usd from the three funds it launched during the first half: Naya Bharat Property Company; European Convergence Development Company; and the Magna Africa Fund.

Charlemagne said stock markets across emerging Europe have shown some volatility over the past six months due to the gyrations of energy prices and concerns over Russia's international relations. It argued though that despite its own experience of outflows in the region investor appetite for risk has remained strong, 'as illustrated by a number of large public offerings that were broadly successful.'

It believes Africa 'is likely to attract further funds as investors seek out the greatest growth potential'.

By Ingrid Smith: +44 (0) 20 7422 4955; ingrid.smith@thomson.com. www.thomsonimnews.com

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