UK fund manager shares catch emerging market chill

LONDON, June 12 Wed Jun 12, 2013 12:12pm EDT

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LONDON, June 12 (Reuters) - The rout in emerging market currencies, stocks and bonds in the past few weeks has prompted heavy selling of shares in British fund management companies exposed to developing economies.

The emerging market sell-off across asset classes has been prompted by expectations that any scaling back of bond-buying stimulus by the U.S. Federal Reserve would send money flooding back to the relative safe-haven of the United States.

This could also translate into emerging market fund outflows from asset managers.

Aberdeen Asset Management, which ranks a number of emerging market funds among its most popular products, has suffered a 19 percent drop in its share price since peaking in late May.

Its benchmark FTSE 100 blue chip index fell 7 percent over the period.

Rival Schroders is off more than 15 percent since peaking in mid May, while the FTSE 100 has fallen 4 percent over the same period.

Emerging market specialist Ashmore Group is down more than 16 percent since shares reached an all time high on May 20.

The MSCI emerging markets index has fallen more than 10 percent since early May.

But analysts said the weakness in fund management company shares was overblown, particularly in the case of Schroders where any outflows from emerging markets would head to developed market equity funds, a core business for the firm.

"If there a more broad setback to emerging market economies ... it probably would affect the likes of Aberdeen and Ashmore more than Schroders which is a more broadly balanced business," said Stuart Duncan, analyst at Peel Hunt.

The slump in investor sentiment marks a sharp reversal from the euphoria earlier this year surrounding companies with emerging market exposure.

Emerging market funds had enjoyed a surge of interest as investors, flush with cheap money from central banks such as the U.S. Fed, hunted for yield and sort to escape weak growth in developed markets.

In this environment, the popularity of Aberdeen's emerging market funds prompted the company to impose a 2 percent initial charge on some products to try to stem investor flows.

Aberdeen and Ashmore declined to comment when asked if they had seen investors withdraw money from their emerging market funds.

A spokeswoman at Schroders said: "Outflows from our emerging market funds is not a trend that we have observed."

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