Investors flock to emerging markets in ‘05
Emerging market bond funds have enjoyed record inflows so far this year and most classes of emerging market equity funds have also seen big inflows, according to Emerging Portfolio Fund Research.
The Massachusetts-based research house, which tracks 8,000 international and emerging market funds accounting for US$4 trillion, says a net US$3.02 billion has flowed into emerging market bond funds for the first five months of 2005, a runaway record.
The researcher said emerging market bond funds had defied a spike in risk aversion caused by recent rumours of trouble in hedge funds, and had continued to be popular while similarly risky high yield bond funds had been sold off.
In a further sign that investors are willing to go beyond the industrialised markets for precious returns, most classes of emerging market equity fund have also had massive inflows so far this year.
In total, the asset class has seen a net US$2.06 billion flow into its coffers, with a small net outflow in global emerging market funds offset by gains in all the specialist funds — Asia ex-Japan, Latin America and especially Europe-Middle East-Africa funds, which have attracted a whopping net US$2.44 billion year to date.
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