* Templeton Asian Growth Fund record $1.9 bln outflows in March quarter
* Outflows continue into fourth straight quarter even as fund turns profit
* Rival funds from First State, Aberdeen close gap with Mobius fund
HONG KONG, April 15 (Reuters) - Mark Mobius' Templeton Asian Growth Fund, Asia's biggest equity mutual fund, suffered record outflows in the March quarter in a sign investors are losing faith with the emerging markets guru.
Returns from Mobius' $11.7 billion fund from Franklin Templeton Investment missed the benchmark last year by the most in 14 years, after some of the stocks Mobius selected fell as a result of political unrest in Thailand and waning appetite for commodities in China.
The fund recovered in January-March to make money in a volatile quarter for emerging market equities, but investors still pulled out a net $1.9 billion, showed estimates by global fund tracker Lipper, a Thomson Reuters company.
The outflows, at over 14 percent of the fund's December-end assets, compared with $5.8 billion net outflows or 5 percent of assets managed by the rest of Asia ex-Japan equity funds in the March quarter, showed data from Lipper.
The shift marks a major change in the fund's fortunes, threatening to end Franklin Templeton's emerging market dominance, with assets of rival funds from First State Investments and Aberdeen Asset Management closing the gap to the narrowest in nearly five years.
"2013 was a tough year for emerging markets, particularly in Asia," Stephen Grundlingh, Franklin Templeton's regional head for Southeast Asia, said in a telephone interview.
Volatility in emerging market assets shocked investors and since European equities outperformed Asia in 2013, many investors switched out of Asian funds, he said.
"We have seen this cycles of outflows before," he added.
In February last year, Mobius' fund managed a record $18.9 billion. But it lost 7.8 percent in 2013 compared with a 3.3 percent rise in the benchmark MSCI AC Asia ex-Japan index .
The fund saw net outflows continue into the fourth straight quarter, with January-March being its worst-ever amount. At $2.8 billion for all of 2013, outflows were even higher than in 2008 when a global financial crisis led to investors pulling out $19.6 billion from Asia ex-Japan equity mutual funds.
Mobius' loss is proving to be a gain for rivals. First State Asia Pacific Leaders Fund, which has seen lower outflows, now manages $9.8 billion, or just $1.9 billion less than Mobius' fund. The gap is down from a whopping $9.3 billion in mid-2011.
At $7.8 billion, Aberdeen Global - Asia Pacific Equity Fund has reduced the lead of Mobius' fund to $3.9 billion from a high of $11.3 billion hit in February 2012.
But Grundlingh said Mobius' fund has made a comeback and benefited from the bets in the financial, industrial and consumer sector stocks that led to underperformance last year, making a strong case for the fund's long term positions.
The fund was up 2.2 percent in the March quarter, outperforming a 0.7 percent decline in the MSCI Asia ex-Japan index.
"Given the bulk of the investors in this fund are retail investors, the typical cycle is that inflows and outflows always lag performance by at least a quarter or two," Grundlingh said.
"I would anticipate that given the strong quarter that we have had, and if Asia and emerging markets in general continue to pick up, we will see the flows coming back," he said. (Editing by Christopher Cushing)