Emerging markets equity and bond funds soak up more cash in early May: EPFR Global Fund

A pattern that started in late March, with cash coming off the sidelines and bypassing funds geared to developed markets in favor of emerging markets equity, High Yield Bond and some sector funds carried into the first week of May. EPFR Global-tracked Asia ex-Japan, Latin America, EMEA and the diversified Global Emerging Markets Equity Funds posted combined inflows of US$3.6bn and Emerging Markets Bond Funds recorded their best week since early 1Q08.

China remains a major driver of both sentiment and fund flows for the emerging markets asset class as its economy responds to aggressive lending by domestic banks. Through May 6 China Equity Funds had taken in fresh money eight of the past nine weeks and 29 of the past 30 trading days, including a y-t-d daily high of US$294 million on May 4.

During a week that also saw fears about the impact of swine flu and the results of the US banking system "stress tests" begin to ebb, EPFR Global-tracked equity funds recorded collective inflows of US$3.69bn. Excluding Money Market Funds, which recorded outflows of US$1.57bn for the week, fixed income funds absorbed another US$2.67bn.