By Simon Jessop
LONDON (Reuters) - Ashmore Group's (L:ASHM) cautious outlook sent its shares lower on Tuesday, despite the emerging markets fund specialist beating profit forecasts thanks to one-off gains.
Chief Executive Mark Coombs said the results were driven by a rally in emerging market asset prices and improving investor sentiment, which helped cushion a previously reported fall in total assets to $52.6 billion from $58.9 billion.
However, while Ashmore said it had seen investors add to their positions in emerging markets over the last year, many institutional investors would take longer to react to improving market conditions, leading to a lag between the start of the recovery and a broader, more sustained trend.
Ashmore has been hit hard in recent years by investor fund outflows over concerns including the impact of slowing growth in China and U.S. interest rate policy.
In the second half of its financial year to end-June, pretax profit fell 8 percent to 167.5 million pounds beating a mean consensus forecast of 142.8 million, Thomson Reuters data showed.
It was buoyed by one-off gains, including 21 million pounds from positive currency moves as the firm's overseas earnings were switched into a weaker pound following Britain's vote to leave the European Union in June.
Ashmore also reported bigger-than-expected gains on so-called seed capital, the money it invested to get new funds off the ground, of 24.6 million pounds.
"Note that both the gain on holding dollar denominated cash on the balance sheet... and the seed capital gain are not recurring items and therefore have no implication for forecasts for the year ending June, 2017," Shore Capital analyst Paul McGinnis said in a note to clients.
Revenue in the period was down 18 percent to 232.5 million pounds, broadly in line with a company-supplied consensus forecast based on 13 analysts, of 230 million pounds.
Ashmore's diluted earnings per share fell 7 percent to 18.1 pence a share, beating a company supplied consensus of 15.2 pence. Ashmore said it would pay a final dividend of 12.1 pence, taking its total dividend for the year to 16.65 pence per share.
Shares in the group were 3.7 percent lower at 341.9 pence at 0814 GMT.