US-based LatAm equity funds see surge in inflows, prices

US-based LatAm equity funds see surge in inflows, prices

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Heightened hopes for a breakthrough in the search for an effective vaccine to combat the COVID-19 pandemic lifted all boats in the week ended Nov. 11, with US-based Latin American-focused equity mutual and exchange traded funds seeing a surge of inflows as investors put cash back into higher risk markets, new data shows.

News that pharmaceutical company, Pfizer, reported early results showing a 90% effectiveness rate on a vaccine set off a scramble in global markets that sent prices surging higher.

In the week ended November 11 there was a net inflow of $77.8 million in fresh cash to LatAm-focused equity funds by US investors, according to Lipper, the mutual fund tracking service of data provider Refinitiv. The 27 funds tracked saw a 12.8% increase in assets under management (AUM) to $9.1 billion. At its peak in January 2011, these funds held nearly $23.5 bln in AUM.

During the reporting period, the benchmark MSCI Latin America stock index rose 11.77%. The index has steadily climbed from its recent bottom on March 23, its weakest point in just over 15 years. In the year-to-date period the index is still down around 27.6%, but up 52.8% from the March 23 low.

In the context of overall US mutual funds invested in the global emerging market equity space, the latest week saw a net inflow of $1.5 bln from the 720 funds tracked by Lipper. This was the biggest net inflow since January 2020 and broke a three week streak of investors pulling money out of the sector. The AUM rose by $19.9 bln, or 4.5%, to $465.8 bln.

Emerging market bond funds and ETFs saw a net inflow of cash that was its strongest since June 2020. Net inflows to 276 funds tracked by the service rose by $616 mln. The AUM rose by $1.7 bln, or 2.7%, to $64.1 bln.