MUMBAI: Investors again opted to cash in some of the handsome year-to-date gains generated by emerging market equity funds and park the proceeds in money market funds during the last week of November. Fund flows were influenced by the prospect of another US rate cut and the weakening of the dollar.
“Despite the angst over the real scope of the global credit crisis, recent flow data suggests that investors are still as focused on returns as they are on risk,” says EPFR Global analyst Cameron Brandt.
“There still isn’t that much appetite for fixed income exposure other than money market funds, one of the usual refuges in times of financial stress. And, when there is a sell-off, we see money jump right back in to take advantage of perceived bargains,” he added.
Asia (excluding Japan) equity funds, whose collective portfolios shed 5.5% in the week before, recorded outflows of $2.47 billion while the diversified Global Emerging Markets (GEM) funds clocked $1.02 billion of funds, pulled out at the net level.
EMEA (Europe, Middle East, Africa) equity funds had the worst week in terms of outflows as a percentage of assets under management. Investors in these funds continue to factor in higher costs facing countries like South Africa, Turkey, Hungary and Egypt with large current account deficits, in a less forgiving credit climate, EPFR report said.
Investors pulled $81 million out of BRICS (Brazil, Russia, India and China) equity funds, but took a lenient view on Russia and Brazil because of their exportable oil reserves. Russia country funds posted modest inflows while flows into their Brazil counterparts were essentially neutral.
But funds geared to China and India, both big oil importers, posted outflows of $688 million and $208 million, respectively, as oil prices continue to test the $100 a barrel mark. US equity funds absorbed a net $7 billion during the last week of November with funds geared to all capitalisations attracting fresh money on expectations of another cut in US interest rates in December.
Hopes of a rate cut have risen following Federal Reserve chairman Ben Bernanke’s latest speech. Once again growth oriented funds outperformed their value counterparts, in both flows and performance terms, across all capitalisations (small, mid, large cap).
“Despite the angst over the real scope of the global credit crisis, recent flow data suggests that investors are still as focused on returns as they are on risk,” says EPFR Global analyst Cameron Brandt.
“There still isn’t that much appetite for fixed income exposure other than money market funds, one of the usual refuges in times of financial stress. And, when there is a sell-off, we see money jump right back in to take advantage of perceived bargains,” he added.
Asia (excluding Japan) equity funds, whose collective portfolios shed 5.5% in the week before, recorded outflows of $2.47 billion while the diversified Global Emerging Markets (GEM) funds clocked $1.02 billion of funds, pulled out at the net level.
EMEA (Europe, Middle East, Africa) equity funds had the worst week in terms of outflows as a percentage of assets under management. Investors in these funds continue to factor in higher costs facing countries like South Africa, Turkey, Hungary and Egypt with large current account deficits, in a less forgiving credit climate, EPFR report said.
Investors pulled $81 million out of BRICS (Brazil, Russia, India and China) equity funds, but took a lenient view on Russia and Brazil because of their exportable oil reserves. Russia country funds posted modest inflows while flows into their Brazil counterparts were essentially neutral.
But funds geared to China and India, both big oil importers, posted outflows of $688 million and $208 million, respectively, as oil prices continue to test the $100 a barrel mark. US equity funds absorbed a net $7 billion during the last week of November with funds geared to all capitalisations attracting fresh money on expectations of another cut in US interest rates in December.
Hopes of a rate cut have risen following Federal Reserve chairman Ben Bernanke’s latest speech. Once again growth oriented funds outperformed their value counterparts, in both flows and performance terms, across all capitalisations (small, mid, large cap).
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