Global Investing

The annus horribilis for emerging markets

January 5, 2014

Last year was one that most emerging market investors would probably like to forget.  MSCI’s main equity index fell 5 percent, bond returns were 6-8 percent in the red and some currencies lost up to 20 percent against the dollar.  Here are some flow numbers  from EPFR Global, the Boston-based agency that released some provisional  annual data to its clients late last week.

While funds dedicated to developed markets — equities and bonds –  received inflows amounting to over 7 percent of their assets under management (AUM), funds investing in emerging stocks lost more than 6 percent of their AUM.

In absolute terms, that amounted to a loss of $15.4 billion for emerging equity funds , banks said citing the EPFR data.

Emerging debt funds shed just over $14 billion in 2013.

On the bright side,  the 2013 outflows only partially reversed the bumper flows from the previous year, when emerging bond and equity flows tracked by EPFR Global took in a combined $88 billion. Also, outflows moderated for the second week in a row in the week to December 31 after the Fed’s mid-December announcement that it would start winding down its stimulus from January.

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