Emerging market equity funds set record for inflows in 2003

Published December 21st, 2003 - 03:00 GMT

The emerging market equity and fixed income funds tracked by EmergingPortfolio Fund Research (EPFR) are about to finish a record setting year in 2003 for inflows from investors.

Of the 961 emerging market equity funds with $122.1 billion in assets tracked by EPFR, including Global Emerging Market (GEM), Asia ex-Japan, Latin America, and Europe/Middle East/Africa (EMEA) equity funds, investors have pumped a total of $11.2 billion in new money into these funds year to date to December 17, 2003. This represents a 15 percent increase in assets from the beginning of this year due to inflows. Emerging market equity funds, thus, have surpassed the previous record set in 1996, when there were inflows of $10.89 billion.

Investors have been injecting fresh money into emerging market funds for most of this year due to a number of factors, including the fact that 2003 will be the fourth consecutive year of emerging markets out performance of developed markets.

“Emerging markets are highly cyclical and are regarded by portfolio investors as a leveraged play on global economic recovery, especially as monetary policy has eased and economies are enjoying domestically driven growth throughout the emerging markets world,” managing director of EPFR, says Brad Durham. “You get stronger economic growth, lower equity valuations, and substantial earnings growth in the emerging markets universe.”

EMEA funds tracked by EPFR received inflows of $573.3 million to December 17, the most since 2000, when they received $732.95 million. These funds have $9.3 billion in assets. — (menareport.com)