EM hard-, local-currency funds fall for third straight week

By Rebecca Melvin

New York, Oct. 19 – Flows for emerging markets bond funds fell for a third straight week despite some encouraging signs in the primary market that included oversubscribed sovereign sales by Turkey and Petroleos Mexicanos SAB de CV, Mexico’s state-run oil company, according to fund flows and asset allocation data tracker EPFR Global.

For the week ending Oct. 17, both hard- and local currency emerging market funds saw more than $500 million redeemed from funds, EPFR said.

At the country level, only Brazil’s bond funds took in more than $20 million, while Thailand’s bond funds experienced the heaviest redemptions. Thailand’s average allocation among the diversified global emerging markets bond funds currently stands at a 21-month high, while Brazil is at a record low.

Most of the U.S. bond fund group recorded inflows going into mid-October, with short-term government bond funds leading the way in both cash and flows as a percentage of assets under management. But these were offset by the more than $1 billion each pulled out of total return and municipal bond funds.

Italy’s government continued to worry markets over its plan to exceed previously agreed 2019 budget guidelines.

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