By Carl Delfeld of the Chartwell ETF Advisor
Emerging markets and the exchange-traded funds that track them continue to attract sizable flows from big global money managers. According to EPFR Global, For the fourth week in a row the diversified global emerging market equity funds and ETFs posted the biggest inflows of any major equity fund group.
The $1.21 billion that investors steered into these funds took year-to-date inflows up to $13.5 billion, over three times the full-year total for 2006. Asia ex-Japan funds and ETFs also absorbed over $1 billion despite posting a collective portfolio loss of 3.96%, the worst showing among the major emerging markets fund groups, and have now taken in 115% of last year’s record-setting inflows.
Once again investors gravitated towards the larger emerging economies. Inflows into Brazil, Korea, China, Greater China and Russia Country Funds totaled $878 million while BRIC equity funds took in another $480.6 million. That represented 56% of the week’s net inflows into all emerging markets funds, up from 30.5% the previous week. With oil prices testing the $100 a barrel mark Russia Country Funds turned in the fourth best weekly performance among pure country funds behind energy major Saudi Arabia (+9.59%), Indonesia (+4.96%) and Vietnam (+1.62%).
One large emerging market that did not fare well was Mexico, which paid for its tight integration with the US economy as investors pulled the equivalent of 7.48% of their beginning of the week assets under management from Mexico Country Funds. That weighed on Latin America Equity Funds, which took in $105 million, well below their year-to-date weekly average of $225 million. EMEA Equity Funds also posted modest inflows.
“Investors globally have been gravitating to the sounder economic and fiscal story that emerging markets represents, but the ever-weakening dollar, if it turns into a destabilizing rout, could even damage the current rosy sentiment of investors towards emerging markets,” says Brad Durham, a managing director of EPFR Global.
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