Emerging market fund flows – Maybe a turning point coming

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Big outflow last week of $-2.2 billion after a week of strong flows $1.9 billion the week before.  What I am seeing today and over last few days in ETF land is that investors are allocating to emerging markets away from domestic markets.

Emerging-markets Japan is seeing outflow as Abe struggles with structural reform in face of sales tax hike, and that U.S. fiscal woes hurting sentiment.

Mexico ( EWW , quote ), Indo and Philippines ( EPHE , quote ) remain crowded markets, and Russia ( RSX , quote ) is the least crowded major market.

What we know is that Global Emerging Market (GEM) players, those who are investing across the emerging market space are largely underweight their bogeys in emerging markets.

According to EFPR, total GEM funds have seen outflows of $4.1 billion YTD, vs. +$51.3 billion inflow in 2012.

Sentiment towards emerging markets remains so negative that I am starting to believe we could see sustainable move higher into year end.

The iShares MSCI Emerging Markets ( EEM , quote ) breaks 200 daily moving average today to the upside...

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Stocks
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