The flow of investment money into emerging market stocks is picking up speed, and the cumulative fund flow into emerging market equities is now the highest level it has been since the beginning of 2009. This is shown in red below. Basically, increasing amounts of money have been allocated to emerging markets stocks.
Meanwhile, investment flows into developed market equity funds present a mirror image. The cumulative net outflow since the beginning of 2009 is at an all-time high, as shown by the blue bars below.
Among the EPFR Global-tracked fund groups posting solid-to-good inflows for the week ending July 21 were Global Emerging Markets (GEM) and Asia ex-Japan Equity and US, Global, High Yield and Emerging Markets Bond Funds. None of the major developed markets equity fund groups managed to attract fresh money, and flows into Global Sector Funds took a turn for the defensive.
From the beginning of 2009 until recently, there has been a net outflow, out of developed equity markets, of more than $60 billion dollars according to the EPFR chart above.
It’s hard to see how the stock market rally since early 2009 can be regarded as ‘mature’ given the fund flow data above. There’s still massive room for sentiment to shift back towards developed market stocks. Optimism and demand for U.S. stocks remains substantially depressed.