GLOBAL - Investors continued to lose favour with Europe equity funds following a third consecutive week of outflows.
The asset class, investing only in developed states, leaked US$97.7m for the week ending May 14, according to EmergingPortfolio.com Fund Research (EPFR).
Total assets in these funds have declined 8% this year due to outflows.
Brad Durham, managing director, EPFR, said that reasons for the negativity include the growth differential between Europe and the US and the reluctance of the European Central Bank to cut rates.
“There’s also a general sense that the post-war run up in European equity values might have run its course temporarily,” he added.
Emerging Europe fared better, along with Middle East and Africa regional equity funds, with positive inflows for the fourth consecutive week. Investors contributed a net US$3.1m, bringing total inflows to US$89.4m this year.
Durham added that Polish and Hungarian stocks were particularly attractive right now; the latter has just started to pick-up again. But Russia was enduring some aggressive selling due to lower oil prices following the Iraq conflict.
Fresh money was also pumped into emerging market bond funds - the hot investment story of the year so far - meaning the 15th consecutive week of positive flows. Funds with US$12bn in assets absorbed US$134.9m worth of net investor contributions, attracting year to date inflows of US$1.95bn or more than three times total inflows for all of 2002.
Also receiving inflows, albeit modest, were Asia (ex-Japan), Latin America and Japan equity funds. Asia (ex-Japan) attracted inflows of US$38.3m for the first time since mid-April and only the second time in eight weeks as investors appeared to be overcoming their fear of the SARS epidemic.
International bond and equity funds and emerging markets also suffered outflows, with withdrawals of US$41.5m, US$232.5m and US$44m respectively.
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