Money flows

Investors favour diversified exposure as flows into EM funds pick up steam

Emerging markets remained in the spotlight during early April as key equity indexes hit fresh year-to-date highs and Greece’s successful bond issue showed that appetite for riskier, more rewarding assets is alive and well.

The week ending April 9 saw EPFR Global-tracked emerging markets equity funds record their biggest inflow since mid-1Q13 while emerging markets bond funds posted back-to-back weekly inflows for the first time since May.
 
Several of the other fund groups that carried some momentum into the second quarter also fared well, with Europe equity and bond, total return, balanced and high yield bond funds all taking in over USD1bn during the week.
 
Overall, equity funds collectively absorbed a net USD11.2bn – a seven week high – and bond funds USD6.2bn while USD19.7bn worth of redemptions from US money market funds handily offset modest flows into their European and Japanese counterparts.
 
At the country level China equity funds took in fresh money for the first time since late January and, despite a clear preference for diversified exposure, investors committed over USD150m to Russia, Spain and Italy equity funds and Sweden bond funds.
 
Among the fund groups seeing over USD250m in redemptions were Germany, UK, Brazil, Korea and Japan equity funds.

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