UBS GEM Fund Flows – Investors shun GEM funds


Despite the small recovery in emerging markets in the last week, flows are trading hard, especially the whimsical ETF flows.  ETFs (aka the marginal buyer) have averaged $-1.1 billion on average last 4 weeks.

Interesting that the crowded trades continue to stay crowded… Philippines ( EPHE , quote ), Indonesia ( EIDO , quote ) and even South Africa ( EZA , quote ) which is a surprise and a little scary considering how hard they have traded Gold miners and the retail sector.

Outflows for all regional funds: Total GEM funds saw strong outflows of just over $2.0 billion last week, compared to outflows of $1.0 billion in the prior week.  All regions recorded net outflows last week.

On a four-week moving average basis, we have seen outflows of $0.3 billion each from Dedicated GEM, EMEA and Asia ex Japan; and inflows of c.$20 million into Latin America.

Non-ETF funds are in net redemption after six months of inflows: ETF funds saw outflows of approximately $1.4 billion last week, compared to outflows of $0.7 billion for non-ETF funds. On a 4-week moving average (WMA) basis, ETF funds have seen outflows of $1.1 billion versus inflows of $0.3 billion for non-ETF funds.  Year-to-date non-ETFs represent 63% of the total fund pool.

Country positioning scorecard: Investors continue to reduce their exposure across the board except in Philippines and Indonesia. Towards the bottom of the table, where positioning is the least crowded, Russia moved down below India. The most crowded countries are: Philippines, Colombia, Thailand, South Africa and Korea whereas the least crowded are: CE3, Morocco, Russia ( RSX , quote ) and India ( EPI , quote ).

Net inflows year-to-date: Total GEM funds have benefited from $24.6 billion of inflows this year compared to $51.3 billion of inflows in 2012. On a cumulative basis, $214 billion has flowed into GEM funds since January 2006.

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

This article appears in: Investing , International , Stocks

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