Emerging Market Bonds Roar

Posted on Monday, September 28, 2009

Last week we took a look at the stunning rally in corporate bonds. Now lets take a look at Emerging Market bonds. FT Alphaville reports the large flows coming into the asset class:

Investors poured $727m into emerging market bond funds during the week to September 23, the equivalent of 1.3 per cent of these funds' total assets and the highest inflow since February 2006, EPFR data show.

Global and US bond funds posted their biggest inflows since early 2001, when EPFR first started tracking them.

Funds dedicated to emerging market equities attracted $2.1bn, a 39-week high, which brought the tally for 2009 to $18.2bn. Funds targeted at investments in Europe, the Middle East and Africa attracted $208m; LatAm funds drew $241m and funds targeted at Asia (excluding Japan) attracted $427m.

These flows have resulted in spreads coming in by more than 400 bps since the end of the year, propelling the asset class up more than 30% year to date.