Emerging markets see healthy inflows for 10th straight week

Investors poured billions into emerging-markets stock funds this week, continuing a 10-week trend of inflows for the category worldwide, according to a report released by Emerging Portfolio Fund Research Inc. Emerging-markets equity funds had inflows of $3.5 billion for the one-week period ended May 13, surpassing U.S. equity funds which took in $2.6 billion, reported the Cambridge, Mass.-based research firm. “I think people believe that emerging markets are going to rebound more quickly than most of the developed countries and be a direct beneficiary of the stimulus programs that the United States — and to a lesser extent, Europe and China — have unveiled,” said Cameron Brandt, global market analyst at EPFR. With the United States issuing extensive debt, the dollar will continue to have a depreciated value against other currencies through the rest of the year, he said. For fixed-income funds, U.S. bond funds posted the most inflows this week with $1.81 billion. U.S. municipal bond funds represented about 45% of the total inflows for the category, the report said. Year-to-date, U.S. bond funds have taken in $19 billion in new cash. In a measure of flows as a percentage of assets, “high-yield-bond funds have attracted the greatest enthusiasm,” Mr. Brandt said. Such funds posted year-to-date flows of $8.4 billion. The flows represent 15% of the assets under management that the funds held at the beginning of the year. For U.S. bond funds, the flows represented 4.8% of assets, he said. “U.S. bond funds are one step away from money market funds,” Mr. Brandt said. “They have minimal returns and a high degree of safety. The flows to high-yield-bond funds are indicative of the increased risk appetite of investors and the increased desire for a higher return.”