Retail investors ‘overwhelmingly’ switching out of EM

Graph downEurope and emerging market fund flows are diverging, with money leaving both equity and bond products that focus on the emerging countries, while European assets are seeing inflows.

Analysts at Bank of America Merrill Lynch say that retail investors “overwhelmingly” prefer developed market equities to emerging markets, and high yield bonds over emerging market debt.

The analysts based their comments on EPFR Global fund flow data which, for the week ending November 13, shows that emerging market equity funds posted their biggest outflow since late June and that investors pulled money out of emerging market bond funds for the 24th time in the past 25 weeks.

The shift took place against the backdrop of stronger-than-expected third quarter GDP numbers from the US, which rekindled fears that tapering of the Federal Reserve’s quantitative easing programme could begin early next year, says EPFR Global.

However, most fund groups saw a “lacklustre week” in both fund flow and performance terms, the data firm says. Overall, EPFR Global-tracked equity funds recorded a collective net inflow of $196 million (€145 million) during the week ending November 13 versus net outflows of $1.18 billion from all bond funds and $2.9 billion from money market funds.

The European Fund and Asset Management Association has also released figures today for investment sales and asset data in September 2013. The data – which covers 99.6% of total Ucits and non-Ucits assets – show that Ucits recorded net outflows of €15 billion in September, compared to net inflows of €15 billion in August.  This turnaround in net sales is attributable mainly to large net outflows from money market funds. 

Net sales of equity funds rose to €14 billion from €2 billion a month earlier. 

Bond funds registered net outflows of €9 billion, up from €7 billion in August. 

Net sales of balanced funds increased to €5 billion from €3 billion in August.

©2013 funds europe