Investors put billions into emerging market equity funds

Funds dedicated to emerging market equities reported their largest weekly inflows since May 2008 during the week ended March 25th, Merrill Lynch said in a report on Friday.

These funds attracted $2.3bn in a third consecutive week of inflows, including $1.6bn through ETFs.

The top talking points, according to Merrill’s Josh Hartnett international investment strategist:

The money is 1) going in via diversified “global EM” category, 2) going in via ETFs which indicates retail & hedge fund activity and 3) going to EM rather than developed market funds.

Retail interest in EM picking-up a bit; inflows should make LO investors less fearful of redemptions/encourage lower cash levels. But no doubt flow numbers show that HF’s are using EM ETFs as a way to quickly raise risk levels; note EEM up a staggering 24.3% in March (that’s 1784% annualized).