Strong dollar, performance fees help Ashmore top forecast

* Reports 37 pct jump in pretax profit to 110.7 mln stg

* Net revenue rose 22 percent to 164 mln pounds

* Foreign exchange gains, higher performance fees help (Adds details, background, analyst quote, share reaction)

By Nishant Kumar

LONDON, Feb 24 (Reuters) - Emerging markets-focused fund manager Ashmore Group (Other OTC: AJMPF - news) beat first-half profit forecasts as a stronger dollar and higher performance fees offset a drop in assets under management.

Investors have been pulling out of emerging markets due to slower economic growth in several of them and the prospect of higher interest rates in the United States.

But Ashmore said the sell-off had made emerging market assets more attractively priced and that ultra-loose monetary policy in Japan and the euro zone could revive investors' interest in the higher yields offered in developing countries.

"Ashmore enters 2015 with emerging markets asset prices at attractive levels after nearly two years of challenging market conditions," it said on Tuesday.

"Fixed income spreads are wider than at any time since the onset of the global financial crisis ... similarly, equities continue to offer attractive value across a broad range of emerging and frontier markets," it added.

Fixed income spreads here refers to the difference in yield of emerging market debt over benchmark U.S. Treasuries.

Pretax profit rose 37 percent to 110.7 million pounds ($170.9 million) for the six months ended Dec (Shanghai: 600875.SS - news) . 31, beating the average forecast of 105.1 million pounds by analysts tracked by StarMine. Net revenue climbed 22 percent to 164 million pounds, above the average forecast of 145.5 million.

Although the overall performance of Ashmore's funds compared with benchmarks was weaker than at the end of June, the proportion eligible to earn performance fees increased.

Such fees rose to 7 million pounds from 700,000 pounds a year earlier, while a stronger dollar resulted in foreign exchange gains of 21.4 million pounds against an 18.5 million pound loss a year earlier.

However, the company recorded an 11 percent fall in net management fees to 133 million pounds as its asset under management (AUM) fell to three-year low of $63.7 billion.

AUM fell by $11.3 billion, mainly due to outflows of $4.5 billion and investment losses of $6.2 billion.

"Ashmore's weaker investment performance could negatively impact flows in the near-term, and higher developed market interest rates over the longer term could cause emerging markets to sell off," RBC Capital Markets analyst Peter Lenardos wrote, reiterating his "underperform" rating on Ashmore shares.

At 1205 GMT, the shares were up 0.6 percent, beating a 0.3 rise in the STOXX Europe 600 Financial Services Index.

($1 = 0.6477 pounds) (Editing by Jason Neely and Mark Potter)