In spite of a slowdown in China and the economies
of nations like Brazil that rely heavily on the export of
commodities to China institutional investors and their
advisors remain bullish on emerging market equities.
Enthusiasm for this market has pushed up net inflows into
emerging market equities from institutional investors and
propelled this market category to number one in investment
database research, according to data from Marietta,
Georgia-based financial data firm eVestment.
During the first quarter of this year, institutional
investors were responsible for $9.3 billion in net inflows into
assets in emerging market equity (all cap equities), one of 369
categories used by eVestment to segment 53,000 investment
vehicles around the world.
eVestment Emerging Mkts All Cap Equity:
Gross Inflows, Gross Outflows and Net Flows
The $9.3 billion first quarter surge is more than double the
pace of the $4.1 billion net inflows in the fourth quarter of
2012 and is the second highest quarterly inflow of funds into
emerging market equity (all cap equities) since the beginning
of the recovery. Quarterly net inflow peaked at $11.0 billion
in the fourth quarter of 2010.
Not all emerging market equity categories attracted
significant new fund flows from institutional investors. For
example, emerging markets passive equity received $707.4
million of net inflows in the first quarter. There was even
less $39.3 million in net inflows into emerging
markets small cap. And emerging market large cap assets had net
outflow of $2.8 billion to institutional investors.
Favorable views of equity segments in emerging market
equities contrasts with a decidedly more skeptical view of
equities on a global basis. In the first quarter there were net
outflows of $3 billion in equity assets from institutional
investors on a global basis, down from $38 billion in net
outflows in the fourth quarter of 2012, according to Rich
Donnellan, product manager at eVestment. For all of 2012, there
was a net outflow of $120 billion from global equity
The outflow of funds from equities on a global basis
simply means investors are saying that the valuations
across equity markets are not something they feel like putting
a lot of money towards, says Peter Laurelli, vice
president of research at eVestment.
Emerging market all cap equities also became the favorite
search category during April, according in eVestment, which
publishes a monthly report on search activity. This category
received an average of 30.3 searches per investment vehicle
tracked in the Advantage database.