UPDATE 2-Ashmore assets hit by equity fund losses

Thu Jul 12, 2012 3:55am EDT

* Assets under management down 3.3 pct at end-June

* Net outflows $600 mln, mostly equities, multi-strategy

* Performance fees for the year estimated at 25 million stg

* Shares down 5.8 pct

By Tommy Wilkes

LONDON, July 12 (Reuters) - Funds house Ashmore Group reported a loss of about a fifth of the money it manages in equities during its fourth quarter as worries about the euro zone debt crisis and a flagging global economy rattled investor confidence.

The London-based manager, which focuses on managing investments in emerging markets, also said in a statement on Thursday performance fees would likely fall versus the previous year's, helping to send its shares down more than 5 percent and making it the biggest FTSE 100 faller.

Ashmore is among the first UK fund managers to update the market on performance during the three months to end-June.

The firm said its assets under management dropped 3.3 percent to $63.7 billion in the period. Analysts at Numis had forecast assets would fall to $64.9 billion.

This decrease included net outflows of $600 million and investment losses of $1.6 billion.

Performance fees for the year are estimated at 25 million pounds ($38.9 million), earned almost entirely in the first half, the group said. This is down sharply from the 85.4 million pounds earned in the previous year.

Shares in Ashmore were down 5.8 percent at 0754 GMT, the biggest fall in the FTSE 100, down 0.78 percent.

"We continue to believe that EM (emerging markets) is a structural long-term asset management growth theme, but we also note that Ashmore has the short-term challenge of declining fee yields. So future earnings growth at Ashmore may not be as strong as the AuM growth potential suggests," analysts at Numis said.

Ashmore has said in the past that the growth of emerging markets as an asset class was reducing the firm's ability to earn performance fees.

OUTFLOWS

Ashmore said net outflows within equities were spread across public and segregated mandates, reducing assets under management in equities to $6.2 billion from $7.8 billion three months earlier.

Last year the group bought a stake in U.S.-based Emerging Markets Management in an effort to beef up its equities expertise.

That deal lifted the percentage of its assets held in equities to 20 percent from 1 percent, but that has since dropped to less than 10 percent after recent falls.

Ashmore also said clients exited its multi-strategy products during the most recent quarter, predominantly from one of its Japanese retail funds.

However, its external debt products, which performed positively during the quarter, enjoyed net inflows after the manager won a new segregated mandate.

Ashmore will report its full-year results on 11 September.

FILED UNDER: