EM draws European investors at rate “not seen in years”

The rate of flows into emerging markets equity funds has hit its highest level since 2012, Morningstar estimates show.

For the quarter ending September 30, globally diversified emerging market equity funds saw total inflows of €10.2 billion – which translates into growth rates not seen since 2012.

Emerging markets funds are also “going against the tide of large outflows” from actively managed equity funds seen in other categories. Active European equity fund outflows were €83.1 billion in the year to September 30, whilst open-ended index funds received €11.4 billion.

The strong rate of growth in emerging market equity funds is also reflected in bond funds, which saw inflows of €8.2 billion during the third quarter, breaking the previous quarterly record from 2014.

Matias Möttölä, senior manager research analyst for Morningstar, said: “Emerging markets are drawing the interest of European fund investors at a pace not seen in years. The last time we saw inflows of this magnitude was in 2012 when investors were then returning to emerging markets after the scares of the 2011 Eurozone crisis.”

Strong recent returns, rising emerging currencies and the relatively lower valuations of emerging market stocks compared to developed markets were the drivers.

©2016 funds europe

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