* Total assets at $69.5 bln at end of December
* Fund sees emerging markets outperforming in 2018
* Shares up 2.7 pct, among top mid-cap gainers (Adds analyst comment, share reaction)
By Simon Jessop
LONDON, Jan 16 (Reuters) - Emerging markets fund manager Ashmore on Tuesday posted a 7 percent rise in second-quarter assets under management, boosted by net inflows of new client money and investment gains.
Total assets at the end of December stood at $69.5 billion after net inflows of $3.6 billion and positive investment performance of $900 million, the London-listed firm said.
Net inflows were particularly strong into its local currency products, as well as corporate debt and equities, Ashmore said. Flows into its blended debt, alternatives and multi-asset investments were flat.
Performance across its fixed income and equities products was positive but flat in its alternatives and liquidity products, it said.
Shares in Ashmore rose 2.7 percent to 439.4 pence each in early deals, among top gainers on the FTSE mid-cap index .
KBW analyst Jonathan Richards said the rise in assets beat his forecast by 3 percent, but given the strong recent performance of Ashmore’s shares he rated them “market perform”.
“In order to justify this valuation, organic growth would need to remain at these elevated levels for some time,” he wrote in a note to clients.
Emerging markets assets have risen strongly in the last two years after several years of underperformance relative to developed markets, helping lure back investors.
Competitive currencies in many emerging market economies were helping drive exports and boost growth, Chief Executive Mark Coombs said, adding he expected more of the same in 2018.
“The next phase of the cycle should see institutional flows stimulating domestic demand and so provide for continued attractive returns, particularly from local currency-denominated assets including equities,” he said. (Reporting by Simon Jessop; Editing by Silvia Aloisi and Edmund Blair)