Friday 16 March 2012

EM Fund flows: running out of breath? | beyondbrics – FT.com

Could investor appetite for EM bonds, voracious so far this year, be easing?

Figures from EPFR, the fund flow monitor, suggest not: inflows into fixed incomes funds climbed to $1.44bn in the week to Wednesday. But RBS, which has been very optimistic about EM funds so far this year, sees signs of a slowdown.

Analyst Demetrios Efstathiou wrote in a note to clients:

We expect inflows to EM funds to slow down from the same stellar pace set so far this year. Supporting further inflows, we note a number of factors; the better than expected economic data, the comfort of the LTRO, the Greek PSI out of the way, and a constructive market mood. However, the recent spike in US Treasury Yields, partly linked to the factors above, could have more legs to it, reducing the appetite for all EM fixed income assets in the short-term.

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