The broker also replaced Schroders (LON:SDRC) with Ashmore as its least preferred asset management stock.
Analyst Haley Tam said in a note titled "The price is not right" that the emerging market bond fund industry matures and investors are starting to rely more on performance track records for allocation decisions.
Her analysis suggests that key Ashmore funds have underperformed over one and five years and as three year returns are better, “quantum of outperformance is small”.
“Modest EM Debt fund flows at Ashmore are in contrast to industry data that suggests H1 calendar 2012 has been a strong period for EM bond fund flows,” said Tam.
“Ashmore appears to be missing out on these trends.”
Tam expects Ashmore’s pre-tax profits to drop five percent this year and next, while earnings per share are set to decline 11 percent this year and five percent in 2013.
Citi downgraded its recommendation on Ashmore to ‘sell’ from ‘neutral’, while also lowering its target price to 300 pence per share from 305 pence previously.
Ashmore fell 4.5 percent to 331.5 pence following the downgrade, which made it the heaviest faller in the FTSE 100 index.