Emerging market bond funds see largest outflows since November 2016

By Rebecca Melvin

New York, Feb. 16 – Emerging market bond funds saw their largest redemptions since the U.S. presidential election more than a year ago as the prospect of more aggressive tightening by the U.S. Federal Reserve to keep inflation from rising beyond its target prompted investors to reign in some holdings, according to data tracker EPFR Global.

Hard currency emerging market bond funds were hardest hit with an outflow of $2.66 billion for the week ending Feb. 14. The outflow for local currency emerging market bond funds was $243 million, resulting in a total outflow of $2.86 billion, according to the EPFR data that is published late Thursday.

That figure was just shy of the $2.9 billion outflow for all emerging market bond funds in the week ending Nov. 23, 2106. And it pales in comparison to the $6.6 billion outflow of all emerging market bond funds in the week that unexpectedly made Donald Trump U.S. president-elect.

The latest week brought widespread redemptions with high-yield bond funds recording their second largest weekly outflow since EPFR started tracking them in 2003.

In addition, there was an inflow for Asia-excluding Japan sovereign bond funds, a segment of emerging markets, but an outflow for the region’s corporate bond funds.

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