Emerging market equity funds ended last year on a positive note, attracting $1.6 billion (Dh5.87bn) of investor contributions in December and reducing the record net outflows from these funds in 2008 to $48.3bn said EPFR Global, which provides fund flows and asset allocation data to financial institutions around the world.
A year when cash was once again king and safety the paramount concern of most investors ended with money market funds adding to the $455bn of total net inflows received during 2008 while inflows into US equity funds during December reduced by half the cumulative outflows for the year.
Year-end fund flows using monthly flow data for January-November and weekly flow data for December shows an historic flight of investor capital from all major equity and most fixed income fund groups.
Investors pulled a total of $321.4bn from the combined equity and bond funds tracked by EPFR Global. And excluding ETFs, which can report inflows in a down market when they are aggressively purchased for lending on to short sellers, total outflows from all non-ETF equity and bond funds amounted to a whopping $475.6bn.
Where did the nearly half trillion in US dollar terms that global investors removed from funds go? It went primarily into money market funds, which enjoyed record inflows of $455bn in 2008, a rise of nearly 15 per cent to the total assets of this fund group, despite a huge outflow in September on investor panic after a major money market fund reported exposure to troubled corporate bonds and dissolved amid investor flight after its net asset value fell below $1.
Overall, outflows from all equity funds were $232bn, with Europe equity funds, emerging market equity funds, and global equity funds responsible for about $186bn of the net redemptions including ETFs, and $244bn excluding them.
While US equity fund outflows amounted to just $27bn including the ETFs, the data excluding the exchange traded funds, which are big among investors in the US for both long and short exposure, resulted in a $133bn outflow shocker.