EM equities see rapid rise in retail flows

Added 22nd August 2016

Retail investment platform Rplan saw a big increase in flows into emerging market funds over the last three months, with the notable exception of China-only investments.

EM equities see rapid rise in retail flows

The emerging market funds offered on Rplan’s platform proved popular with investors between 1 June and 15 August, generating a 75% increase in flows.

Neptune Investment Management’s India and Africa funds, Jupiter Asset Management’s India fund, the BlackRock Emerging Markets Equity Tracker and JPM Emerging Markets were among the most sought-after in terms of flows in the last six weeks, Rplan confirmed.  

Rplan’s CIO Stuart Dyer said his platform’s boom in emerging market equities is consistent with investor behaviour in the wider market.

“Between the end of 2010 and December 2015, the MSCI Emerging Market Equity Index fell by around 30% but this year it’s up by over 14%.  Some market commentators are saying there is a turn in the cycle of emerging market equities and this is fuelling investors to increase their exposure in this asset class.”

Despite being the largest emerging market, China was the outlier in Rplan’s data, suffering a 54% decline in flows over the same period.

Again, the discrepancy in flows between the broader emerging markets category and China specific funds mirrors the performances of the MSCI Emerging Market Equity and Shanghai Composite Index this year, said Dyer.

“The Shanghai Composite Index is down by around 14% this year, and this follows a huge level of volatility in Chinese stocks last year. This, combined with concerns about the Chinese economy and the actions of the government to intervene in its stock market, has spooked some investors and many are voting with their feet and withdrawing their investments here to go elsewhere,” he said.  

“Emerging markets are experiencing a bit of a boom in terms of investor interest but they have gone cold on the biggest emerging market in the world – China,” Dyer concluded.

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