Retail investors last week committed fresh money to emerging market equity funds for the first time in six weeks, according to flow data tracked by EPFR. All four of the major regional fund groups posted inflows ranging from $44 million for EMEA Equity Funds to $1.39 billion for the diversified Global Emerging Markets (GEM) Equity Funds.
Latin America Equity Funds recorded their biggest inflow since late May on the back of strong commitments to Brazil Equity Funds. Investors are chasing a rally in Brazilian equities now in its 21st month as they anticipate additional structural reforms, lower interest rates–Brazil's central bank cut its key rate by another 1 percent in early September–and 3 percent GDP growth next year. For the moment, investors looking to Latin America are not factoring in a crowded electoral calendar, with Chilean voters going to the polls in November and presidential elections scheduled next year in Brazil, Mexico, Colombia and, possibly, Venezuela.
The predictability of China's one-party politics, and that party's current focus on fiscal stability, continues to draw money into China Equity Funds which posted inflows for the fourth straight week. That is their longest streak since a five-week run ended in mid-3Q14.
Although the other fund groups dedicated to BRIC markets, India and Russia Equity Funds, also recorded inflows, BRIC Equity Funds saw redemptions hit a 14-week high, Frontier Markets Equity Funds extended their recent week on, week off pattern with their fourth inflow in the past eight weeks.
Among the EMEA Country Fund groups, flows into Russia Equity Funds continued their recent rebound. But, with the exception of Poland Equity Funds, investors have been slow to translate the improving outlook for the Eurozone and European into increased allocations for Emerging Europe Regional and Country Fund groups.