Investors flock into emerging market funds but avoid China

Retail investors on a UK platform moved into emerging market funds this summer, but showed little appetite for China-only funds.

The retail investment platform, Rplan, saw a 75% increase in flows into emerging market funds between June 1 and August 15 compared to the same year-before period.

Stuart Dyer, chief investment officer at Rplan, saw this as a result of improving macro-economic conditions and noted that the MSCI Emerging Market Index has risen 14% this year, compared to a 30% fall between the end of 2010 and December 2015.

However, the platform’s customers caused a 54% decline in flows to China-only funds during the same June/August period this year.

Dyer said the Rplan flows could reflect that emerging market equities are entering a new cycle – though China equities have still suffered, most notably when the Shanghai Composite Index lost a third of its value in a matter of weeks in June 2015.

The index is down by around 14% this year, which when combined with concerns about the Chinese economy and the actions of the government to intervene in its stock market, has spooked some investors and many are voting with their feet, according to Dyer.

India appears to be a popular choice for retail investors as two of top five emerging market funds on Rplan’s platform target this market: Neptune India and Jupiter India.

Rplan has over 2000 funds on its platform, with over 150 focusing on emerging markets. However, the firm does not release information regarding assets under management or the number of customers it has.

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