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Around 12 months ago, the FTSE 100 offered investors the opportunity to lock in a 3.5% dividend yield. And those who took advantage of a passive index fund have since gone on to earn just over a 7% total return. That’s quite a different story from those who opted to invest in Ashmore Group (LSE:ASHM).
The emerging market specialist has had to endure a bit of a rough ride lately, with geopolitical turmoil adversely impacting investor sentiment towards its financial products. As such, the company has seen close to a quarter of its market-cap wiped out.
However, while frustrating for current shareholders, this may present an interesting opportunity for new investors. Why? Because, as a result of its downward trajectory, the dividend yield’s now an impressive 11.5%. And given that the firm has continued to pay dividends, this FTSE stock could be a tremendous source of passive income.
What’s going on at Ashmore?
There are a variety of factors driving the stock’s poor performance. However, the biggest concern is undoubtedly the steady outflowing stream of client funds. Since emerging markets are far more sensitive to geopolitical turmoil, performance in this area of the global financial markets hasn’t been terrific compared to more developed regions.
With fewer assets under management, Ashmore has less chance to earn fees that drive its income stream. And the impact of this has been made clear when looking at its early 2025 results, which saw net management fees falling by 17% and pre-tax profits tumbling by 33%.
Needless to say, those aren’t the trends investors want to see. And with that in mind, it’s easy to understand why the stock has underperformance versus both the FTSE 100 and FTSE 250. However, in April, management released a trading update on how things have been going since these disappointing results. And things might be about to turn the corner.
The benefit of a weaker US dollar
Being the global reserve currency, the value of the US dollar can have significant implications for emerging market nations. A stronger dollar makes debt repayment far more challenging in poorer economies. But a weaker dollar has the opposite effect. And with all the shenanigans of the new US trade policy, the downward moments in currency exchange rates have actually helped spark some fresh growth in emerging markets.
The MSCI Emerging Markets index has enjoyed a 4.3% boost since the start of the year, closely followed by the FTSE Emerging index at 3.1%. As a result, Ashmore’s team of active investors was able to deliver market-beating returns during the period for both its equity and fixed income products.
While client net outflows continue to be problematic, superior investment performance is a critical step in boosting investor sentiment and attracting as well as retaining fresh client capital. And should conditions continue to improve, the group’s impressive dividend yield might be here to stay.
With that in mind, I think Ashmore shares might be worthy of a more thorough analysis to determine whether a rare double-digit dividend yield opportunity exists for income investors.
