According to EPFR Global, emerging market bond and global emerging market equity funds took in more than $1bn during the week ending 9 March. At the same time, flows into high yield bond funds for the year so far have already eclipsed 2011’s full year total.
Institutional investors moved to the relative security of global emerging market equity funds, committing $1.3bn, although retail investors were net redeemers for the first week since the beginning of this year. Institutions were spooked by China cutting its GDP target for the year to 7.5%, with a subsequent move away from Asia Pacific ex Japan equity funds.
This announcement also encouraged a move away from those funds geared towards China growth, with Korea equity funds seeing their biggest redemptions since the middle of Q4 2011 and Taiwan equity funds saw outflows for the sixth straight week.
Investors’ higher risk outlook favoured high yield and emerging market bond funds as well, with $23bn invested into the former so far this year, with the latter seeing their second best week of 2012.
There is the constant debate with emerging market debt as to whether to invest in local currencies or dollar-denominated funds, with the latest stats showing a move away from local currency, now representing about a third of the total.
