Emerging mkt equity funds see record inflow in Q2

Equity funds focussed on India and other Asian countries cornered more than 85 per cent of the record investment of $26.5 billion in emerging markets in the second quarter of this year, a report says.     

Data compiled by international fund-tracking firm EPFR Global shows the combined emerging market equity funds which include — Global Emerging Markets (GEM) funds, Asia ex-Japan, Latin America and EMEA Equity Funds — collectively absorbed $26.5 billion in the second quarter of 2009.     

"The flows into emerging market equity funds eclipsed the previous record for a single quarter, the $22.4 billion absorbed in fourth quarter of 2007," the report says.     

The report reveals Asia ex-Japan equity funds absorbed over $23 billion in the second quarter of this year.     

Further, the EPFR Global-tracked emerging markets equity funds absorbed $972 million during the final week of June.     

"China's aggressive efforts to sustain GDP growth at around eight per cent and some not-so-bad data from key developed markets prompted investors to increase their exposure to riskier assets," the report points out.     

Besides, China was again the focal point for investors, with its manufacturing data and loan growth encouraging fresh flows into China and Asia (excluding-Japan) equity funds. 

However, the second quarter ended with something of a whimper for funds investing in markets or regions that depend on commodity stories, the report adds.     

Latin America and Europe, the Middle East and Africa (EMEA) equity funds posted their second consecutive week of outflows. But Latin America funds recorded inflows of nearly $5 billion for the quarter and EMEA funds took in $700 million.      

The commodity and energy sector funds saw their 16th and 12th week inflow streaks coming to an end during the final week of June as the current mismatch between supply and demand outweighed hopes for a broad economic recovery going into next year.     

Meanwhile, financial sector funds saw a good chunk of the more than $700 million that had flowed out in the previous week, return leaving year-to-date outflows standing at $1.19 billion.