Net investment into Asian and emerging market equity funds soared in the fourth quarter of 2010, according to latest data from international fund flow consultant EPFR Global.
However, despite the inflows, total acquisitions of Asia equity funds, excluding Japan, dropped to US$21.5 billion last year from US$26.5 billion in 2009.
Almost half, notably $10.2 billion of Asian inflows last year, occurred in Q4.
Investment in global emerging market equity funds climbed to US$62 billion last year, with around a third of the inflows occurring in Q4.
Including Africa, Asia, Eastern Europe, Latin America and Middle Eastern specialist equity funds, the inflows reached US$92.1 billion last year, higher than the US$83.3 billion in 2009.
“Of the four major emerging markets fund groups only the diversified global emerging markets equity funds set a new record,” said Ian Wilson, managing director of fund data at EPFR Global. The funds comprised two-thirds of emerging market equity flows.
“Asia ex-Japan equity funds again absorbed the second largest amount of fresh money, but flows slipped off their 2009 pace as concerns about China’s response to over-investment, inflation and asset bubbles dogged sentiment towards the region on and off all year,” added Mr. Wilson.
While there were better flows into US funds, there remained significant outflows in 2010.
The European crisis caused outflows in Q4 2010, with outflows from the European funds reaching US$22.1 billion last year, compared to inflows of US$1.24 billion in 2009.
However, German equity funds enjoyed a record year as it was Europe’s best performing market, aided by a growth in exports and the flight to safety.