Posted inEmerging MarketsEquitiesFixed Income

Inflows stall across emerging market funds in first for 2017

Emerging Market equity funds tracked by data provider EPFR Global posted their biggest outflows since the last week of 2016 when the 21-week run of inflows came to an end

Emerging Markets bond funds experienced net redemptions for the first time since late January during the week ending August 16.

EPFR said retail investors accounted for the bulk of the EM equity fund outflows but were net contributors to EM bond funds for the seventh straight week.

The financial intelligence firm said the main reasons for the upsurge in redemptions were the war of words between the US and North Korea, and fears that stronger macroeconomic data could strengthen the hand of hawkish US Federal Reserve policymakers.

Equities unpopular

Overall, EPFR-tracked equity funds saw a net $1.3bn (£1.0bn, €1.1bn) flow out during the week ending August 16, with outflows from dividend equity funds jumping to a 21-week high, while bond funds took in another $3.5bn and money market funds $1.6bn.

At the single country level, Indian equity funds experienced their heaviest redemptions since early January and outflows from China equity funds climbed to a 67-week high while Argentina equity funds snapped their longest run of outflows so far this year.

Among Developed Market country funds, France equity funds extended their longest inflow streak in over 15 years and commitments to Japan equity funds hit a 20-week high.

Europe equity funds took in fresh money for the 20th time in the past 21 weeks against a backdrop of improving macroeconomic data.

“Investors continue to buy into the reform story promised by newly elected president Emmanuel Macron, although the popularity of those proposals among French voters appears to be evaporating quickly,” the data company said.

EPFR tracks over 90,000 traditional and alternative funds domiciled globally with $30trn in total assets under management.

The second week of August was also another choppy one for EPFR-tracked sector fund flows as investors changed their assessment of geopolitical risks and the US Federal Reserve’s willingness to raise interest rates during the second half of 2017.

Financial sector funds, which absorbed over $950m the previous week, experienced net redemptions of over $700m.

Healthcare/Biotechnology funds also saw inflows turn to outflows while Gold and Infrastructure funds took in enough fresh money to cancel out the previous week’s redemptions.

Part of the Bonhill Group.