Emerging market equity funds attracts USD 265 mn in a week

Emerging market equity funds struggled to attract fresh money last week and absorbed a mere net USD 265 million on account of outflows in commodity fund, says a EPFR report.

The latest infusion into emerging market equity funds marks the seventh straight week of net inflows.

According to data compiled by international fund tracking firm EPFR, equity funds absorbed USD 265 million during the during the week ended May 11. However, it was a sharp down on the USD 1.2 billion it took in previous week and the USD 11.1 billion received in the month of April.

"With investors questioning the real demand for commodities in early May, emerging market equity funds struggled to attract fresh money during the week ending May 11, but took in a net USD 265.3 million and reducing year-to-date outflows to USD 5.7 billion," the report noted.

However, Asia excluding Japan, has snapped its sixth straight week of inflows as China has been struggling with perceptions that policymakers have still not brought inflation to heel.Moreover, outflows from emerging market equity funds stemmed in part from a rough week for Russia, whose investment case was hit by the sharp drop in commodity prices and the central bank's latest rate hike.

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Latin America equity funds posted inflows for only the fifth time in the 19 weeks.

In terms of sectors, commodity sector funds experienced record setting outflows for the second consecutive week amounting to USD 2.3 billion. Gold and precious metals funds bore the brunt of the selling due to a "combination of profit taking, higher margin requirements and questions about the strength of global growth in the second half of 2011."

In contrast, real estate and consumer goods funds recorded solid inflows for the week while technology and utilities sector funds posted modest outflows.