Investors pull money out of emerging markets as commodities fade | FT Alphaville

Investors pull money out of emerging markets as commodities fade

Investors turned defensive during the second week of August, according to the latest data from EPFR, which tracks fund flows.

An overall lack of “animal spirits” in the market contributed to outflows from funds geared to emerging markets, while the cautious mood benefited US equity and bond funds, the data provider said.

The week’s worst performing major fund group – Latin America Equity funds – suffered a tenth consecutive week of outflows and posted a collective 6.26 per cent loss.In sectoral terms, Financial funds suffered after dismal second quarter earnings and analyst downgrades. Outflows from these funds reached $955m during the second week of August.

Elsewhere, investors removed $1.15bn from energy sector funds, and pulled money out of funds dedicated to the Middle Eastern and African equities for the first time this year.

With some commodity prices hitting six-month lows and the price of oil dropping briefly below $113 a barrel, investors pulled more money out of EPFR Global-tracked Latin America and EMEA Equity Funds and extended Asia ex-Japan Equity Funds’ winning streak to four straight weeks. The lack of optimism about the global economy, however, saw the diversified Global Emerging Markets (GEM) Equity Funds post outflows for the ninth time in 10 weeks.

But some optimism remains:

High Yield Bond Funds also took in fresh money – for only the second time in nine weeks – as some investors responded to the influx of better quality credits dropping into the high yield pool due to the latest round of ratings downgrades

Real Estate Sector Funds posted solid inflows and funds geared to some of the more heavily sold Asian markets – India, China, Korea and Vietnam – attracted some interest.

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Go West: US equities on the move – FT Alphaville