Net flows for emerging market mutual funds turned negative in July and amounted to a loss of $700 million, according to figures released by eMergingPortfolio.com, a website sponsored by Global Investor Publishing that collects financial data on emerging markets.The data is based on the flows of approximately 1,300 funds that track emerging markets throughout the world. Net outflows for the year through the end of July totaled $580 million. It was the first
time emerging markets recorded net outflows for the year, according to eMergingPortfolio.com.
"For the first quarter, investors were pretty optimistic but the momentum dried up and turned negative," said Ian Wilson, managing director of fund research for eMergingPortfolio.com.
American investors, who account for approximately 55 percent of the flows into emerging market funds, have lost interest, he said.
"If the Americans aren't putting money in, it hurts the industry and I think the attention has been focused on NASDAQ and technology funds," Wilson said.
Approximately $2.7 billion flowed into emerging market funds in the first two months of the year, but the category has suffered net outflows for five consecutive months, he said. Net flows were a positive $110 million at the end of June, he said.
Preliminary figures for August indicate another month of net outflows, but not as much as previous months, Wilson said.
"I expect to see inflows in the last quarter of the year and I see emerging market funds finishing the year $1 to $2 million in the positive column," he said.
The net assets for the 1,300 funds tracked by the firm totaled $133 billion at the end of July, down from $140.1 billion at the end of June.