Risk aversion in the market has led to investors pulling out of local currency emerging market debt funds. Managers tell Joanna Faith why this is not necessarily the best strategy.
Emerging market debt was undoubtedly the big sales story for the European funds industry last year, with net sales amassing €40bn, according to Lipper. However, like many risk assets, EMD took a hit during the summer’s dramatic sell-off as investors sought shelter in the arms of relative safe havens. At the height of the market volatility in August, £457m was pulled out of European-domiciled EMD funds, while September saw net outflows of £1.94bn. This is compared to £2.48bn of inflows in July, according to Lipper. The recent market rout was particularly difficult for emerging marke...
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