Ashmore warned that Russia’s war in Ukraine could add to growing inflationary pressures, as the specialist emerging markets manager saw clients withdraw $3.7 billion from its funds in the first quarter.

The London-based fund reported a sharp 10% drop in assets under management to $78.3 billion at the end of March – a move it blamed on Moscow’s invasion of Ukraine.

“The main economic impact of the war is pushing up inflation, and it’s being felt around the world,” Ashmore Chief Executive Mark Combs said on Thursday.

Combs said the Ukraine war would have “profound consequences for the existing world order,” echoing a warning from the International Monetary Fund, which described the Russian aggression as “huge setback” for the global economic recovery from the coronavirus pandemic.

Ashmore A big bet has been made In the weeks before the invasion of Ukraine, Russian assets held about $500 million in debt exposure linked to troubled Chinese property developer Evergrande Group, according to Bloomberg.

Shares in the fund fell as much as 9 percent on Thursday to hit a six-year low before closing inching higher.

Emerging and developing economies face the prospect of higher borrowing costs and capital outflows due to Russia’s actions, the International Monetary Fund and others have warned.

Global food and energy prices have soared amid fears of supply disruptions in Russia and Ukraine, the world’s two most important producers of major commodities including crude oil, natural gas and wheat.

Maarten-Jan Bakkum, senior emerging markets strategist at NN, said: “Rising energy and food prices due to the war in Ukraine is a big problem for many emerging market economies that were struggling to recover from the coronavirus pandemic even before the conflict started. recovering from the epidemic.” Investment Partners in the Netherlands.

The MSCI Emerging Markets index is down nearly 10% since the start of the year as the war in Ukraine escalates, and stocks in developing countries also weaken.

Investors also pulled $2.5 billion from Vanguard’s flagship emerging markets exchange-traded fund, the largest emerging markets tracker, so far this year.

Net outflows from emerging-market ETFs sold in the U.S. and Europe hit $14.8 billion in the first quarter, according to data provider Morningstar.

Active fund managers, which aim to pick winning stocks in emerging markets, are also struggling. Two-thirds of the 246 global emerging-markets fund managers with $500 billion in assets under management failed to beat the MSCI emerging-markets benchmark in the first quarter, according to data provider Copley Fund Research.

“Some global emerging market funds have lost a fifth of their value this year, and Russia is a major factor in those losses,” said Steve Holden, chief executive of Copley Fund Research.

Bakkum of NN Investment Partners said he was concerned that the war in Ukraine would escalate further and cause bigger problems in emerging markets.

“There are already signs of social unrest in some developing countries. This complicates the policy response, as central banks in emerging markets face pressure to raise interest rates in response to rising inflation,” Bakum said.