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FUND FLOWS: Emerging Market Equity Funds Continue Inflow Streak

The 24-week run of consecutive inflows to emerging market equity funds is the longest streak since 2013

Among the major EPFR Global-tracked Emerging Markets Equity Funds groups only the diversified Global Emerging Markets (GEM) Equity Funds posted inflows during the second week of July. But that was enough to offset redemptions from the three big regional fund groups and ensure that, overall. Emerging Markets Equity Funds extended their longest inflow streak since a 24-week run ended in the first quarter of 2013.

Institutional commitments, which have underpinned the latest inflows, were positive for the 17th straight week but retail redemptions hit a seven-week high.

EPFR Global

Flows so far this year have favored ETFs over actively managed funds, even though the latter have modestly outperformed their passively managed peers.

EPFR Global

Among Asia ex-Japan Country Fund groups, India Equity Funds posted consecutive weekly outflows for the first time since late February and China Equity Funds recorded their eighth consecutive weekly outflow.

Investors did commit fresh money to Korea Equity Funds, which continue to benefit from bullishness towards the technology sector and hopes that the new administration will pursue needed reforms. Indonesia Equity Funds posted consecutive weekly inflows for the first time since late April. Indonesia's benchmark equity index, the Jakarta Composite, posted a series of fresh record highs during the second quarter this year. But mutual fund investors and managers have been reluctant to chase this rally. Among the concerns cited is the impact recent cuts to electricity subsidies will have on domestic consumption, inflation and interest rates and the risk of a populist backlash against the reforms President Joko Widodo's administration has implemented during the past two years.

Politics weighed on flows for Brazil Equity Funds, with concerns about the public reaction to former President Luiz Inacio Lula da Silv a's sentencing and the possibility incumbent Michel Temer will face corruption charges trumping signs of economic recovery and the passage of a much anticipated package of labor market reforms. But Chile Equity Funds recorded their biggest inflow since mid-March as copper prices staged a modest rebound.

TAGS: Investment
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