UPDATE 1-Ashmore suffers outflows as clients exit emerging markets

Tue Jan 14, 2014 3:51am EST

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* Net outflows $3.5 bln, misses forecasts

* Assets under management $75.3 bln

* Fee change to cut revenues by $25 mln

* Shares drop as much as 12 percent

By Tommy Wilkes

LONDON, Jan 14 (Reuters) - Ashmore Group reported large net outflows from its funds at the end of last year after investors took fright at heightened volatility in its core emerging markets, sending its shares down by more than 12 percent.

In a trading statement on Tuesday, Ashmore said clients pulled out $3.5 billion more from its range of funds than they put in during the last three months of 2013. This compared with net inflows forecasts of $1.4 billion by analysts at Numis and flat by Canaccord Genuity.

"Market performance and, to some extent, investor behaviour during the quarter continued to be influenced by uncertainty surrounding U.S. monetary policy and the heightened market volatility experienced since early May last year," Mark Coombs, Ashmore's billionaire founder said in the statement.

Coombs, however, said that greater clarity over U.S. monetary policy this year, combined with the relative attractiveness of emerging market assets over developed countries, gave him confidence for the year ahead.

With investment performance adding $300 million to Ashmore's assets during the quarter, assets under management overall at the London-based group fell to $75.3 billion.

Ashmore also said the basis of calculation for the annual investment management fee on two of its closed end funds was amended during the quarter, with the pro forma annualised effect reducing revenues by $25 million.

Analysts said this was likely to have led to the large fall in the share price on Tuesday as well as the outflows, which although larger than forecast suggested portfolio rebalancing on the part of clients rather than a major pullback by institutional investors, Ashmore's core client base.

Numis said in a note that it was a "disappointing statement and we expect to cut our annualised EBITDA (earnings before interest, tax, depreciation and amortisation) forecasts by 5-10 percent as a result."

Shares in Ashmore were changing hands at 370 pence at 0835 GMT, down 9.4 percent, after trading as low as 354 pence.

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