Monday, 2 February 2009

Modest Fund Outflows Registered in Last Week of January, Says EFPR

According to EFPR, emerging market bond funds posted modest outflows of about $200 million in the week of Jan. 28, compared with about $300 million in the previous week. Bond funds posted net outflows in 24 of the last 25 weeks. The bulk of last week's outflows came from hard currency funds, while inflows into High-Yield bond funds is losing steam. On the other hand, equity funds reported modest outflows for a fifth week in a row: About $500 million left global, Asia ex-Japan and Middle East, Africa and Eastern Europe equity funds, less than half the almost $1.1 billion of the prior week. Equity funds in Latin America increased their holdings for a fifth week, by the equivalent of almost half a percentage point of assets under management.

One interesting trend to show here: In December, the changes in country weights for emerging market bond funds were driven by ''both changes in asset values as well as reallocations of funds,´´ according to Dresdner Kleinwort. On a country level, this resulted in higher exposure to Russia, Brazil and South Africa at the expense of Argentina, Venezuela and Ukraine. These countries are being punished by what investors see as a spree of bad news and erroneous announcements that deteriorate their credit standing among the international community.

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