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Emerging Market Fund Flows Stay Positive – Solid Run Continues

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Emerging Market Funds (combined ETF and non-ETF) squeaked out another positive week for the week ending May 28th to now have strung together an impressive run.

emerging-markets-BRIC-MINT

In fact the move on this spread from close to .40 in October of 2010 to the lows we saw in mid-December of .1865 has included numerous places where emerging markets looked ready to make a long term outperformance shift.

Emerging market ( EEM , quote ) equities have now seen positive gains in 9 of the last 10 weeks, despite the smaller gain of $500m last week. The breakdown was evenly split between ETF and non-ETF money. Regionally Asia was a laggard, but this comes after largely outperforming on positive flows during the 10 week run.

Here is how the numbers breakdown:

  • LatAm funds reported inflows of $80mn. EMEA-dedicated funds saw outflows of $30mn.
  • Outflows from Asia (ex. Japan) -$350mn.
  • Surprisingly Russia ( RSX , quote ) was strong, seeing +100m of flow

Frontier funds also were positive as the world seeks higher yielding investments. According to EPFR data, in April, all frontier fund classes gained AUM vs March, adding more than $1.5bn (total $23.8bn).

What does all of this data tell us? Emerging markets have recovered from a death spiral in sentiment to be slowly clawing back assets. We believe the rate of flow is healthy as it has been neither frothy nor tilted towards one particular country or investment theme within emerging market.

The flow remains focused on growth and valuations that are attractive when weighed against allocations to debt and developed equity markets

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


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

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