Emerging Market Funds

It would stand to reason that fund performance would drive assets flows, yet emerging market funds bucked this trend last year, according to data from Strategic Insight. Fifteen of the top 17 emerging market fund categories had negative returns in 2015—and only four of them had net outflows. Overall, the average return for the 17 categories was -8.88%, yet they had net inflows of $538.0 billion, which brought their total net assets to $2.71 trillion.

However, investors tended to take notice of the two worst-performing emerging market categories. Ranking No. 1 worst, Brazilian funds lost nearly one-third of their value (27.72%) and, consequently, had net outflows of $40.56 billion, reducing total assets to $565.6 billion. With an average return of -17.62% in 2015, funds focused on Turkey were the next worst-performing category, and these funds saw $127.60 million in outflows, reducing total assets to $12.80 billion.

Examination of all fund categories with negative returns last year shows they bucked the trend, with largely strong inflows. Peru delivered the third-worst performance, -14.09%, and had $2 million in inflows for total assets of $5.91 billion.

Next up were Malaysian funds, which saw their value drop by 13.45%. Nonetheless, these funds still took in $3.55 billion so that, at year-end, their assets totaled $51.89 billion. Funds focused on Mexico lost 12.34% yet attracted $825 million to end the year with total assets of $107.78 billion.

Chilean funds took a 13.06% performance nosedive, yet they attracted a sound $597.0 million in assets to close 2015 with a total of $41.18 billion invested. Indonesian funds saw -11.73% returns yet attracted an astounding $2.90 billion in assets to end the year with $18.63 billion. Polish funds declined by 11.03% in value, but reaped $498.70 million in assets for a year-end total of $33.27 billion.

Thai funds, as well, saw very strong inflows despite losing 10.51% in value; they took in $12.44 billion in assets to end the year with a total of $111.66 billion. Hungarian funds were less popular, when it came to performance/flows. They lost 8.89% in value and suffered $2.55 billion in outflows to lower their total assets to $15.70 billion. Funds invested in the Czech Republic lost 7.76% of value yet attracted $777 million to boost their total assets to $6.46 billion.

Russian funds were also net losers when it came to performance/flows in 2015. They lost 6.28% of their value, saw $306 million walk out the door and ended the year with $8.08 billion.

2015 Net Flows Into and Performance of Emerging Market Funds