During the one-year period ending in June, HNWIs in a global context stood out among professional/institutional investors, pouring a net $1.28bn into emerging market equity strategies and $350m into emerging market fixed income funds.
One-year institutional cumulative flows ($m)
|
Investor type |
EM fixed income |
EM equity |
|
High net worth |
$350 |
$1,277 |
|
Superannuation |
($2,102) |
$198 |
|
Foundation / endowment |
141 |
($769) |
|
Union / multi-empl |
231 |
454 |
|
Corporate |
($5,410) |
($4,925) |
|
Sub-advised |
($1,193) |
($8,095) |
|
Sovereign wealth fund |
($3,966) |
($7,664) |
|
Public fund |
($10,050) |
($687) |
|
Insurance |
($5,658) |
$2 |
Source: Evestment
Sovereign wealth funds (SWFs) and sub-advised investors were the biggest avoiders of emerging market equity strategies during the same period, while public funds and insurance firms represented the most outflows in fixed income.
“The SWF redemptions have been consistent [for both strategies], with outflows occurring in 10 of the last 12 quarters for EM equity and 11 of 12 for EM for fixed income,” the report said.
In terms of geography, US-domiciled investors put the most money into emerging markets equity ($4.9bn), followed by Asia ex-Japan investors ($254m).
Europe (ex-UK) and Asia ex-Japan investors were the biggest investors in emerging market fixed income strategies, pouring in $10.8bn and $3.35bn respectively.
Low allocation
Both Asia- and US-domiciled investors still lag their European counterparts when it comes to investing in emerging market funds. EM equity funds make up 2%-3% of their long-only assets compared to around 5% for Europe-based investors, the report said.
EM equity AUM as % of total long-only AUM
Source: Evestment
The same observation can be made about emerging market fixed income strategies: European investors have the bigger investment compared to counterparts in Asia and the US.
EM fixed income AUM as % of total long-only AUM
Source: Evestment
