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Equity fund outflows shrink

Feb 14, 2014

Emerging market equity funds get some respite as pace of outflows slows

Emerging market fund outflows slowed in the week to February 12, with investors taking $3.08bn from equity funds, half the amount posted a week earlier, according to Barclays.

 

At $21.70bn year-to-date outflows from EM equity funds have exceeded the $15.20bn recorded in 2013, the bank said. Barclays said retail investors had been leading the exit and were recently joined by institutional investors.

 

"While the retail exodus from EM is large and fast, it may not be simply a view on 'poor' EM fundamentals but rather a savings-consumption choice," the investment bank said in a separate report.

 

Week-on-week Latam equity outflows remained steady at $190mn last week. Meanwhile, bond outflows reached $1.37bn in the week to Feb. 12, down from $1.95bn a week earlier.

 

LatAm investors said they were not overly concerned about fund outflows because they represent retail investors with short-term positions who have panicked by recent headlines on volatility and economic turmoil in some EM like Argentina and Turkey.

 

"The media still want to play it up, but I think in general investors are beginning to feel a little more conscious that this is not Armageddon, that this is not a 1997 or 1998 sell off," said a DCM banker. LF



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Jan Dehn, Ashmore Investment Management