Europe, Middle East and Africa (Emea) equity funds continued to post outflows during the first week of this year and were the only major emerging markets fund group to post outflows.
According to data by EPFR Global, which provides data on global funds performance, said emerging markets equities enjoyed a buoyant start to 2009, with Latin America, Emea, Gem and Asia ex-Japan equity funds recording collective portfolio gains of 9.31 per cent, 7.34 per cent, 4.5 per cent and 3.85 per cent respectively. Gem equity funds had the strongest inflows, in both dollar and percentage terms, while Emea equity funds were the only major emerging markets fund group to post outflows.
Flows into Latin America equity funds, fuelled by renewed enthusiasm for Brazil, hit a 32-week high of $191 million (Dh701m). A jump in commodity prices, anticipation of a fiscal stimulus package and inflation data that keeps the door open for interest rate cuts helped Brazil's equity markets put together its best run in over a year during early 2009. A second BRICs market, China, helped drive flows into Asia ex-Japan funds while a third, India, made a modest contribution despite the news that key information technology play Satyam had released false accounts that understated its debt and overstated its profits.
Emea equity funds, meanwhile, extended their outflow streak to 22 weeks and $6.18 billion as investors remained sceptical of Russia and other key markets. There were some signs of a shift in focus, with emerging Europe equity funds posting a rare week of inflows while funds geared to the Middle East remained under pressure.
On the heels of a year where investors pumped $422bn into money market funds and nearly pulled US equity fund flows back to neutral during the fourth quarter. Money market funds absorbed another $37bn during the first week. A closer look at the numbers, however, suggests that investor sentiment continues its slow thaw.
Meanwhile, emerging markets bond funds posted inflows for the first time in 22 weeks, while technology sector funds snapped their six-week losing run. Asia ex-Japan, Global and the geographically diversified global emerging markets (Gem) equity funds posted solid inflows, as did Latin America equity and commodities sector funds.
Overall, equity funds took in a net $5.7bn and non-money market fixed income funds $746m during the first week of the New Year. Among the major fund groups still out of favour with investors were balanced, global bond, Emea equity and Japan equity.
In sector funds, the recent pattern of generally subdued flows into EPFR Global-tracked sector funds continued into the New Year, with flows ranging from a high of $220m into commodities sector funds to a low of $27m out of telecom sector funds. The runaway winners for 2008 in flow terms, financial sector funds, were one of only two sector fund groups to post outflows. But the other fund group geared to an interest rate sensitive sector, real estate, took in a net $103m.
All of the fund groups geared to the historically defensive sectors attracted fresh money, with consumer goods, healthcare/ biotechnology and utilities sector funds recording inflows of $175m, $115m and $64m respectively.