| LONDON, June 28
LONDON, June 28 Investment funds dedicated to
emerging market equities have posted record monthly outflows in
June, shedding their entire year-to-date takings, banks said on
Friday, citing data from EPFR Global.
It was the fifth straight week of outflow for equity funds
which lost $5.6 billion in the week ended June 26, according to
the Boston-based fund tracker which releases weekly data to
clients late on Thursday.
The data showed that on a monthly basis, dedicated emerging
equity funds suffered $19.86 billion in outflows in the four
weeks of June, outstripping the previous record set in January
2008, when $18.7 billion fled the sector.
That leaves funds with a net 2013 outflow of $1.7 billion,
banks said, compared to gains of $18.1 billion as of end-May.
The withdrawals coincide with huge losses on emerging assets
since the U.S. Federal Reserve hinted in May that economic
recovery may allow it to start unwinding stimulus.
The sell-off gathered pace at the end of the month when
worries escalated over Chinese growth, taking emerging equity
losses to over 13 percent in the April-June period
"I'd see these latest outflows as healthy because we were
concerned managers were not generally holding enough cash but in
the past few weeks we have seen some cash-raising," said
John-Paul Smith, head of emerging equity strategy at Deutsche
"The real test will come when it becomes obvious to
investors there are severe structural problems in China," Smith
said. "In the next few weeks money will flow out at a reduced
pace but outflows will pick up again when we get a hiccup in
Emerging debt funds meanwhile saw $5.57 billion flee in the
past week, the largest weekly outflow in history, data showed.
While year-to-date flows to emerging bond funds are in the
black, the past week's losses represent a third of net 2013
inflows, according to EPFR data cited by banks. Returns are
minus 6-8 percent, according to JPMorgan's benchmark indices.
Analysts pointed out however that hard currency bond funds
are already in outflow territory in terms of year-to-date flows.
The losses were not confined to emerging markets however.
Developed equity funds saw weekly outflows of $7.6 billion, with
U.S funds reporting the largest outflows of $4.8 billion though
Japan reported inflows for the 28th week in a row.
Funds investing in high-yield bonds from developed markets
posted record weekly outflows of $6.8 billion, the banks said.