During the second quarter, $137.5 billion flowed out of money-market funds and about $7.6 billion left U.S., Europe and Japan equity funds, as the combined emerging market equity funds absorbed $26.5 billion. U.S. bond funds took in $20.2 billion, high-yield bond funds $7.7 billion and other fixed-income fund groups $8.4 billion, according to the research group EPFR Global.
The flows into emerging market equity funds surpassed the previous record for a single quarter, $22.4 billion in the fourth quarter of 2007.
There was a bit of a pull-back in early July, though, which EPFR Global attributes to fresh doubts about the U.S. appetite for emerging-markets exports and global demand for raw materials. Asia ex-Japan and Latin America equity funds gave up $365 million and $307 million respectively.
BRIC equity funds, however, fared well, taking in fresh money for the 16th consecutive week as year-to-date inflows approach $2 billion. And funds investing in the so-called frontier markets enjoyed a better week, with flows into Africa regional and Vietnam equity funds hitting year-to-date and seven-week highs respectively.
Fears that spring’s green shoots could wither in the harsh light of the 2Q’09 earnings season weighed on developed markets and the funds that invest in them during early July, with U.S. equity funds recording outflows for a fourth- straight week and Europe equity funds for the seventh time in the past eight weeks.
Still, the two major diversified fund groups that invest primarily in developed markets both took in new money in early July, according to EPFR Global. Global equity funds absorbed $659 million and Pacific equity funds $84 million.