LONDON (Reuters) - British fund manager Ashmore reported a further $2 billion of quarterly net outflows of client cash on Friday, as investors continued to shun the specialist firm's emerging markets funds.

In a fourth quarter trading update Ashmore also said its assets under management fell 5% to $49.5 billion at the end of June, down from $51.9 billion in the prior quarter. Negative investment performance of around $400 million also contributed to the dip, the firm said.

Ashmore said investor appetite for emerging markets remained subdued, driving continued outflows, but it expected flows to recover.

"As the trajectories of emerging and developed countries continue to diverge, investor appetite for emerging markets exposure will improve and capital flows will follow, supporting higher risk-adjusted returns in emerging markets over the medium term," said Mark Coombs, CEO of Ashmore.

Emerging markets performance over the three months was broadly in line with the previous quarter, the company added, with several strategies delivering positive returns, while local currency bonds were held back by a stronger US dollar.

(Reporting by Yamini Kalia in Bengaluru and Iain Withers in London; Editing by Rashmi Aich and Michael Perry)