Stampede from Debt, Equity Funds Eases

Investors returned cash to EM equity funds and slowed their departure from EM debt funds in the week to July 3, as markets stabilized after a heavy mid-June sell-off. EM equity funds took inflows of $706m, as investors walked back partially on outflows of $5.62bn the previous week, according to EPFR. LatAm equity funds continued suffering, however, with outflows doubling to $281.9m, although they were still less than the $493m that left such funds in the week to June 19. EM debt portfolios continued losing cash, with $956m leaving funds, but the pace had slowed from the $5.57bn outflows recorded the previous week. Analysts at Barclays say flows can be expected to stabilize after recent sharp volatility, “but a return to consistent inflows is probably not yet on the horizon, given the uncertainty over US interest rates and the lack of action (as yet) from the European Central Bank and Bank of England on new monetary measures.” In terms of performance, LatAm equity funds fell 2.74% for the week ended July 3, and are down 16.99% year-to-date, according to Lipper. EM funds were down 0.55% during the week, to bring them to a year-to-date loss of 8.94%. EM debt funds posted a 0.61% gain on the week, but are still down 6.74% year-to-date.