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Emerging markets may be back in the reckoning, shows the quarterly fund flows data put out by EPFR Global. In the quarter ended March 2012, all Emerging Markets equity funds increased their net inflows to $25.5 billion from the net outflow of $23.7 billion reported in the corresponding quarter last year. In contrast, developed market Equity Funds posted a net outflow of $10.7 billion, as against the $49-billion inflows reported in the same period in 2011.
Increase in inflows to India Equity Funds and BRICs were among the other major notable trends during the quarter.
Improving inflows
Sensex may have put in the best quarterly returns (in dollar terms) among its BRICS peers, but it wasn't the most favourite investment destination for global investors in the March quarter.
India Equity Funds ranked third, after China and Russia in terms of the quantum of inflows netted in during the quarter.
It, however, managed to attract better inflows that other major emerging market equity fund groups.
India Equity Funds reported a net inflow of $553 million (about Rs 2,765 crore) for the quarter as against a net outflow of $526 million (about Rs 2,630 crore) in the same quarter last year. While the turn in fund flows is significant, it wasn't the top investment destination. Country-based funds such as China and Russia managed to net higher inflows.
China raked in the highest inflows among major emerging market groups. It attracted a net inflow of $1.6 billion this quarter, as against a net outflow of $1.5 billion in the same quarter last year. Incidentally, March also marked the best quarter for China since the third quarter of 2010. Russia Equity Funds came in second, netting in $1.2 billion flows largely led by the growing interest in the country's oil story.
India, however, proved to be a better investment destination than Brazil during the quarter. Brazil Equity Funds reported a net outflow of $437 million, hitting its highest level since second quarter of 2010 amidst concerns that the country may have to play catch up with inflation going into next year. It had recorded an outflow of $132 million in the March 2011 quarter.
BRICS regain importance
Investors also seem to be warming up to BRIC as an investment theme. As a fund group, BRIC managed to net in fund flows of about $300 million in the quarter, considerably higher than the net outflow of $2.3 billion seen in the corresponding quarter last year.
As for equity indices performance, Sensex topped the chart with 17 per cent quarterly gains amongst its BRICS peers (in dollar terms). This was followed by Russia's RTS (16 per cent) and Brazil's Bovespa (14 per cent). China's Shanghai Composite Index scored the lowest (4 per cent).
> srividhya.sivakumar@thehindu.co.in
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