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Emerging markets are starting to take a beating as the commodity supercycle appears to be winding down and the U.S. dollar is strengthening around the world.
BofA Merrill Lynch Chief Investment Strategist Michael Hartnett says the "big story" in this week's fund flow data is the "Exit from Emerging Markets."
Emerging market equity funds saw their largest weekly outflows ($2.9 billion, or 0.3% of assets under management) in 18 months, and emerging market debt funds saw their first weekly outflows ($0.2 billion, or 0.1% of assets under management) in a year.
Although emerging markets may be the big story, equity funds around the globe recorded $2.8 billion in weekly outflows, a sharp reversal from some of the big inflows we've seen in recent weeks.
Below is a full breakdown, via Hartnett.
Flows by Asset Class
Equities: $2.8bn outflows ($1.2bn via ETF's); just the second week of redemptions in 2013
Bonds: $1.4bn inflows = 22 straight weeks
Commodities: $1.0bn outflows (16 straight weeks)
Money Market Funds: $8.5bn inflows
Flows by Equity Region
Largest weekly outflows from EM equity funds since Dec'11 ($2.9bn)
With that said, our EM Flow Trading Rule is still a ways from a contrarian "buy" signal
Note that Brazil funds have now seen 14 straight weeks of redemptions (longest outflow streak on record)
European equities also see largest outflows in 4 weeks ($1.0bn)
Despite market consolidation, modest inflows to US ($0.4bn) and Japan ($0.5bn)
By sector, banks and real estate funds continue to see solid inflows ($1.1bn combined)
Flows by Fixed Income Sector
Inflows concentrated in IG bond funds ($2.4bn) even as YTD total return turns negative and floating-rate debt ($1.1bn), which offers rate protection
Otherwise, EM debt funds see first outflows in 51 weeks ($0.2bn)
7 straight weeks out of TIPS ($0.3bn)
3 straight weeks out of Govt/Tsy ($0.9bn)
First outflows from HY bond funds in 7 weeks ($0.3bn)
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