Investors Flee From Emerging Markets

In the week ended November 13, investors pulled $US4.7 billion out of emerging-market equity funds, marking the largest outflow from the asset class in 20 weeks.

Meanwhile, EM debt funds saw $US1.8 billion in redemptions — the most in 10 weeks.

“Retail overwhelmingly prefers developed-market over emerging-market equities and high yield over emerging-market debt,” says BofA Merrill Lynch chief investment strategist Michael Hartnett.

Below is a complete breakdown of this week’s fund flows, via Hartnett.

Asset Class Flows

Equities: small $US0.2bn inflows (note $US1.6bn LO inflows offset by $US1.4bn ETF outflows)

Bonds: $2.7bn outflows ($85bn outflows since Jun’13)

Precious metals: 9 straight weeks of outflows

MMF: first outflows in 4 weeks

Equity Flows

EM: largest outflows in 20 weeks ($4.7bn); fund redemptions concentrated in Global EM, Korea & Brazil

Europe: 20 straight weeks of inflows

Japan: 10 straight weeks of inflows

US: modest $US2.2bn inflows

Fixed Income Flows

7 straight weeks of outflows from EM debt funds ($1.8bn) (outflows in 24 out of past 25 weeks)

31 straight weeks of outflows from TIPS

26 straight weeks of outflows from MBS

73 straight weeks of inflows to floating-rate debt

Modest inflows into both IG and HY bond funds

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