Emerging market equity funds, which had a stellar start this year, faltered in March as they have witnessed redemption of over $2 billion since March, says a report.
According to the data complied by the international fund tracking firm EPFR, emerging market equity funds had a storming start to the year as they pulled in $32.5 billion in the first two months of 2013.
In a sharp contrast, the outflows from emerging market equity funds since the beginning of March has touched $2 billion as investors shifted their attention and money from funds offering exposure to European and emerging markets to those focusing on the US and Japan, EPFR said.
The report further noted that the dedicated BRIC equity funds which focus mainly on Brazil, Russia, India and China have posted significant outflows since the beginning of 2011, while other emerging market funds have fared well.
"Once again the BRICs (Brazil, Russia, India and China) theme stood out among the main emerging markets fund groups for the wrong reasons. Dedicated BRIC equity funds have now posted outflows 107 of the 119 weeks since the beginning of 2011," EPFR said, adding that the other EM themes, however, fared well.
Meanwhile, flows into Asia ex-Japan equity funds were driven by optimism about China during the first eight weeks of the year.
"But fears the new leadership will move aggressively to curb excesses in the banking and property sectors, even at the cost of some growth, prompted investors to pull back in March and focus their attention on some of the smaller regional markets," EPFR said.
Both Thailand and Philippines equity funds recorded their biggest quarterly inflows since EPFR Global started tracking them in 1996.
Meanwhile, EPFR Global-tracked Developed Markets Equity Funds ended March having enjoyed their best quarter on record as money poured into the US, Japan and the diversified Global Equity Funds.
Flows into the major diversified developed markets fund group, Global Equity Funds, consistently exceeded the $1 billion mark as they took in fresh money every week of the quarter.
