Displayed with permission from Value Walk
Emerging market funds have seen a huge spike in interest from investors so far this year, thanks to renewed confidence in the global economy. Emerging market equity funds are big winners, as flows are so robust in fact that total inflows are now at a post-2006 peak according to UBS’s equity market strategist Geoff Dennis.
In a research report published at the end of last week, Dennis noted that for the week ending 28 April, global emerging market equity funds attracted $2.4 billion inflows, the seventh consecutive week of inflows recorded for the sector. Over this period total inflows are $14.5 billion. Across all emerging markets, India and China reported the largest flows for the third week in a row, followed by Taiwan, Korea, and Brazil.
Emerging Market Equity Funds Attract Most Money Since 2006
Equity flows may have been positive for the past seven weeks, but all classes of dedicated global emerging market funds have registered inflows for 17 consecutive weeks. Surprisingly, flows have bucked the wider allocation trend with both active and passive mandates attracting investor attention. Since the start of the year, emerging market ETFs have reported inflows of $15.9 billion, equivalent to 6% of assets under management while long-only funds have attracted $4.5 billion or 0.8% of assets under management. In recent weeks, however, the distribution of flows has become relatively more favourable for long only funds according to the UBS report. Of the $14.5 billion in equity flows over the past seven weeks, long-only funds have attracted around one-third of the total. For the week ending 28 April, inflows into long-only funds hit $948 million, compared to the ETF inflows of $1.4 billion.