Emerging market funds suck in almost $6 b in week — EPFR

Monday, 25 October 2010 06:07 -     - {{hitsCtrl.values.hits}}

SINGAPORE (Reuters) - Investors poured another $5.8 billion into emerging market funds in the third week of October, with global emerging market equity funds seeing record inflows for the second time in three weeks, fund tracker EPFR said.

Investors also committed $1.4 billion to emerging market bond funds in the week as they sought shelter from the falling U.S. dollar and looked for higher yields elsewhere, EPFR said.

Commodity funds also pulled in more than $1 billion.

The flood of money into emerging markets is causing a major headache for policymakers who worry their surging currencies will hurt exports, stunting economic growth.

The inflows are also fuelling concerns about asset bubbles forming in local equity and property markets, complicating fiscal and monetary policy.

Currency tensions are a key topic of discussion at a G20 finance ministers’ meeting starting on Friday. Overall, global equity funds tracked by EPFR absorbed a net $4.7 billion for the week while their bond counterparts took in about $4.7 billion.

Money market funds posted their biggest outflow since the second week of September as investors sought better returns.

Emerging market equity fund flows

Global emerging market equity funds absorbed about $3.8 billion in the week, Boston-based EPFR said. Year-to-date flows into this fund group now exceed last year’s record $44.2 billion.

Asia ex-Japan, Latin America and EMEA equity funds posted inflows ranging from $327 million to $981 million.

Dedicated BRIC (Brazil, Russia, India and China) equity funds had their best week since February, but were again eclipsed by Frontier equity funds, which pulled in $150 million, a 145-week high. Turkey equity funds saw inflows for the eighth week.

U.S., Global, Europe, Pacific and Japan equity funds

As their economies sputtered, appetite for developed market equity slowed.

Global equity funds posted their first back-to-back weeks of inflows since March, while European equity funds saw their fourth consecutive week of inflows as investors rotated money from dedicated country to regional fund groups.

But investors pulled a net $1.9 billion out of U.S equity funds, with modest flows into small cap funds more than offset by redemptions from large cap blend exchange traded funds.

Japan equity funds saw net redemptions for the 16th time in the past 17 weeks as the government downgraded its outlook for the economy and the surging yen weighed on exporters.

Sector funds

Year-to-date flows into commodity sector funds topped $19 billion in the week as investors sought to hedge the weaker dollar and responded to strong Chinese demand.

The other big winner during the latest week were technology sector funds as a lackluster third-quarter earnings season showed signs of improvement.

Sector funds in energy, telecoms and utilities saw outflows.

Bond and other Fixed Income Funds

U.S., global and emerging market bond funds all took in over $1 billion during the week and year-to-date flows into all bond funds tracked by EPFR hit $355.7 billion.

With 10 weeks of the year left, flows into emerging market, global, U.S. and high-yield bond funds now stand at 486 percent, 205 percent, 87 percent and 78 percent of their 2009 totals.

Flows into emerging market bond funds have been positive for 21 consecutive weeks and heavily favoured funds with local currency mandates in the latest week.

LaGuardia to stress on Lanka’s potential as frontier market  at ICASL do

A highly resourceful interactive session is expected at the forthcoming CEOs’ Breakfast Forum organised by the Institute of Chartered Accountants of Sri Lanka (ICASL) on 27 October at 7.30 a.m. at the Cinnamon Lakeside Colombo.

The keynote speaker at this high profile event will be Don LaGuardia, Principal Partner of Logan Rockefeller (LR) Global in New York, who will speak on the theme “Investing in Frontier Markets.” During his speech, LaGuardia will give an overview of the Global Frontier Markets and the benefits to the economy and local companies from frontier market investments.

LaGuardia will use the breakfast forum as a platform to impart his knowledge and experience to the participants which will include a high degree of corporate leaders including CEOs, business leaders and other professionals in the country.

He will stress on the attractiveness of Sri Lanka as a frontier market and also given an insight into what LR Global looks for in an investment and his company’s experiences in other frontier markets.

LaGuardia is a founder and partner of LR Global Partners, and a member of the portfolio investment team that manages the firm’s funds. He has been investing in frontier markets for over 13 years and oversees all of the firm’s activities in its five offices based in New York, Dhaka, Colombo, Hanoi and Singapore. 

Since founding LR Global in 1997, LaGuardia has travelled to more than 30 Frontier Markets and has built up a global network of relationships with local business leaders that aid in the firms due diligence process and opportunity pipeline in otherwise opaque markets.

Previously, LaGuardia spent five years at Rockefeller & Co. (R&Co.) as an equity analyst. Prior to joining R&Co., he spent six years at BMW of North America as a financial analyst and business planning manager. Previously, LaGuardia spent five years as an auditor at PriceWaterhouseCoopers.

LaGuardia received a BA in public accounting from Pace University and an MBA in international finance from New York University. In 1992, he received his Certified Public Accountant designation and is a member of the American Institute of Certified Public Accountants.