Worries over trade war fail to dampen EM equity funds

Emerging markets equity funds attracted nearly $2 billion (€1.62 billion) last week, led by Latin America.

EPFR Global said the flows in the five days to Thursday (22) happened “despite another US interest rate hike”, which had been largely priced in.

The prospect of a trade war triggered by higher US tariffs also did not dent flows, the firm noted.

Latin America equity funds led the way in terms of both cash and percent of assets under management. Figures were not given, but EPFR said commitments to these funds hit a level last seen in the final quarter of 2012 when all three of the world’s major central banks were unveiling fresh monetary stimulus programmes.

Funds dedicated to both Brazil and Mexico benefitted the most, with Brazil equity funds seeing their largest inflow since the third week of May last year and Mexico equity funds since the last quarter of 2016.

Europe equity funds “continue to struggle” and EPFR said this was due to political uncertainty and concern about whether the European Central Bank will hold its promise to wrap up its current quantitative easing programme by the end of the third quarter. Flows to this fund group contracted for the fifth week in a row as they posted consecutive weekly outflows.

©2018 funds europe

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