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Emerging market equity funds witness $41 bn outflows in Jan-March: Report

New Delhi: Investors pulled out over $41 billion from equity funds focused on emerging markets, including India, in the first three months of 2014, after the US Federal Reserve began winding down its quantitative easing

PTI [ Updated: April 09, 2014 16:39 IST ]
emerging market equity funds witness 41 bn outflows in jan
emerging market equity funds witness 41 bn outflows in jan march report

New Delhi: Investors pulled out over $41 billion from equity funds focused on emerging markets, including India, in the first three months of 2014, after the US Federal Reserve began winding down its quantitative easing programme, says a report by funds tracking firm EPFR Global.


However, investors have started moving back to emerging market equities during the final days of March, it said.

According to the report, $41.05 billion has flown out of emerging market equity funds in January-March period of 2014 against an inflow of $29.78 billion in the same period last year.

“Emerging market equity funds endured a rough start to 2014 as the winding down of the Federal Reserve's quantitative easing programme, a crowded electoral calendar, mixed economic data from China and events in Ukraine gave both institutional and retail investors plenty of good reasons to keep a distance,” the report added.

It, however, said the final days of March saw equity funds focused on emerging markets make a “modest but perceptible start on reversing the more than $40-billion worth of outflows — a quarterly record — that they chalked up during the first three months of 2014.”

EPFR said that the rebound was mainly due to institutional investors as they were the main drivers of overall flows into equity funds.

At the country-wise level, equity funds focused on China witnessed a fund outflow of $3.01 billion in January-March, followed by Korea ($1.56 billion), Mexico ($1.1 billion), India ($870 million), Brazil ($602 million) and Russia ($345 million).

The report said: “flows into India equity funds began to rebound as investors responded to better inflation and current account deficit numbers and hopes of a more business friendly government in the aftermath of May general elections.”

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