Investors looking to emerging markets in early April showed a preference for the largest ones, with fund groups dedicated to three of the four BRIC (Brazil, Russia, India and China) markets posting fair to strong inflows and flows into BRIC Equity Funds hitting a level last seen in 4Q15 while Frontier Markets Equity Funds experienced their heaviest redemptions since the first week of 2008. Overall, EPFR Global-tracked Emerging Markets Equity Funds collectively took in fresh money for the third straight week with retail commitments hitting a 24-week high.
The inflows recorded by BRIC Equity Funds were the eighth in the 14 weeks YTD. During 2016 this fund group only posted 11 weekly inflows and between 2013 and 2015 they only recorded inflows eight of the 156 weeks. The week also saw both India and Brazil Equity Funds attract over $150 million and Russia Equity Funds post inflows.
While sentiment towards the BRICs markets has warmed, Frontier Equity Markets Funds have seen money redeemed three of the past four weeks. The latest outflows were, however, largely concentrated in a single fund family.
Although Russia Equity Funds took in fresh money, EMEA Equity Funds suffered overall due to events in Turkey, where the country is preparing for a constitutional referendum whose outcome appears finely balanced, and South Africa where President Jacob Zuma recently fired Pravin Gordhan, the country’s well-respected finance minister. Allocations for Turkey among GEM Equity Funds remain close to the 14-year low that they touched in early February and redemptions from Turkey Equity Funds during the week ending April 5 hit a 43-week high.
Among the Asia ex-Japan Country Fund groups, the two that have stood out in recent weeks both have defensive reputations based on the role the domestic demand plays in their economies. Commitments to Malaysia Equity Funds climbed to their highest level in over 10 months while India Equity Funds extended their longest inflow streak since 4Q15.
Cameron Brandt is Director of Research for EPFR Global, an Informa Financial Intelligence company.
