Dedicated emerging market equity funds posted a fourth consecutive week of positive flows during the week ended April 1, according to data from fund-tracker EPFR.
Investors poured just over $1bn into these funds during the week, equivalent to almost 0.4 per cent of total assets. This is the first four-week run of positive flows since May 2008.
Here’s a break down, via Merrill Lynch and Deutsche Bank data:
* Global EM funds saw $0.9bn inflow, Asia saw $0.4bn inflow
* EMEA and LatAm funds see small redemptions
* Flows for developed markets were mixed as US funds (ex. ETFs) and Western European funds (ex. ETFs) posted marginal inflows equivalent to 0.03% of AuM and 0.02% of AuM respectively.
* Japan funds (ex. ETFs) registered outflows equivalent to 1.26% of AuM.
* EM bond funds, which witnessed positive flows last week, registered outflows equivalent to 0.36 per cent of total assets
Merrill Lynch’s international investment strategist Michael Hartnett said the pace of inflows had triggered a “sell” according to an internal trading rule, although he advised caution (emphasis FT Alphaville’s):
Trading rule says: inflows in excess of 1.5% of total AUM in 4-week period = sell
Inflows in past 4 weeks = 1.7% of total AUM so sell signal is only just triggered
Important to note these sell signals work with lag (unlike buy signals): four big sell signals in April ‘06, July ‘07, Sept ‘07 & April ‘08 all worked with 2-4 week lag, so could be early
