Emerging Markets Equity Funds Post Strong Q1 Fund Flows Results

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Includes: EEM, IEMG, PRMSX, PRZIX, VEIEX, VEMAX
by: Patrick Keon
Summary

Emerging markets equity funds have taken in $18.0 billion in net new money for the year to date.

The group has had twelve straight weekly net inflows.

The iShares Core MSCI Emerging Markets ETF has had net inflows of $5.0 billion.

Emerging markets equity funds have recorded their third best quarterly net inflows ever (+18.0 billion) for the quarter to date. The group has done this on the strength of its current streak of 12 straight weekly net inflows, during which time emerging markets equity funds posted their fourth largest weekly net positive flow (+$3.4 billion for the fund-flows week ended February 6) in the group's history. Lipper tracks fund-flows data going back to 1992.

Similar to other asset classes, emerging market equity funds took strength from the Federal Reserve easing off its interest-rate hike program and its hawkish stance at the start of the year. In general, lower (or static) U.S. interest rates are accompanied by a weaker U.S. dollar and lower U.S. Treasury yields — these two factors are a boon to emerging markets equities. This, coupled along with rumblings that the U.S and China were close to ending their trade war, made emerging markets equities an attractive investment.

The net inflows for emerging markets funds in Q1 were more heavily weighted to ETFs (+$13.1 billion) than mutual funds (+$4.9 billion). On the ETF side of the ledger, the largest individual net inflows belonged to the iShares Core MSCI Emerging Markets ETF (IEMG, +$5.0 billion) and the iShares MSCI Emerging Markets ETF (EEM, +$2.5 billion). For mutual funds, the best net positive flows belonged to the Vanguard Emerging Markets Stock Index Fund (VEMAX, VEIEX, +$2.3 billion) and the T. Rowe Price Emerging Markets Stock Fund (PRMSX, PRZIX, +$747 million).

Emerging Markets Equity Funds (including both mutual funds and ETFs), Quarterly Net Flows ($Bil), Q1 2018-Q1 2019 (to date)

Source: Lipper

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