(FT) -- Emerging market bond and equity funds are set for a record level of inflows in 2010 as investors increasingly abandon those dealing in western shares.
About $40bn of investors' money has flowed into emerging markets debt funds in the first nine months of the year -- four times the previous record for a full year, according to EPFR, a data provider that monitors fund flows. Inflows into global and US bond funds are also set to hit record amounts this year, raising fears of a bubble in the debt markets.
Cameron Brandt, global markets analyst at EPFR, said the "re-rating" of emerging market debt was the big trend of the year as investors who have fled to the relative safety of bonds look for higher returns: "Emerging markets bonds are where the real desperation for yield has been. To buy into them you have to [ignore] a lot of political risk".
The main outflows have come from money market funds, which have seen $500bn leave in the first nine months as investors became fed up with the extremely low interest rates they offer.
Equity funds in emerging markets have seen inflows of $50bn, a striking contrast with the $80bn outflows recorded by western funds up until the end of September.
CNN
