Emerging market-focused equity funds snap 6-week losing streak

PTI New Delhi | Updated on March 13, 2011

Global investors pumped in a net $8 million into emerging market-dedicated equity funds last week, ending a six-week losing streak that began in mid-January on the strength of investor's appetite for exposure to Russia's energy story.

“Emerging markets equity funds posted collective inflows of $8 million for the week ending March 9, ending a losing run that ran back to mid-January,” according to data compiled by international fund tracking firm EPFR.

Russia-focused equity funds witnessed the 15th straight week of inflows as oil prices climbed over $110 a barrel.

The funds have absorbed over $2.7 billion so far this year, compared to $3.48 billion for all of 2010. “Emerging markets equity funds witnessed an inflow largely on the strength of investor appetite for exposure to Russia's energy story,” the report noted.

But despite these flows and the end of China equity funds' outflow streak, BRIC (Brazil, Russia, India and China) equity funds continue to struggle with total outflows, which are upward of $2 billion since their losing run began in late November. In recent months, many emerging markets, including India and China, have been grappling with high price rise, which also poses the threat of derailing the fragile global economic recovery.

However, EPFR did not disclose specific outflow figures for India-focused funds. According to information available with SEBI, foreign institutional investors (FIIs) invested about $387.25 million in the Indian market last week after pulling out $2 billion in January-February.

Although the strife in Libya and fears it could spill over into West Asia dominated the headlines, West Asia and Africa equity funds registered net inflows for the first time in six weeks, though investors continued to pull money out of Africa regional funds and Latin America equity funds.

Uncertainty about the effect of current oil prices on global economic growth resulted in a mixed week for sectoral funds, with energy and technology sector funds seeing five and 13-week inflow streaks come to an end.

In contrast, the commodity sector absorbed over $1 billion of fresh money for the second week running and real estate sector funds witnessed their biggest weekly inflow in over 14 months. Diversified global equity funds extended their winning run to 10 weeks. However, Pacific equity funds continued to see outflows.

Published on March 13, 2011

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