* Templeton Asian Growth Fund record $1.9 bln outflows in
* Outflows continue into fourth straight quarter even as
fund turns profit
* Rival funds from First State, Aberdeen close gap with
By Nishant Kumar
HONG KONG, April 15 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
"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)