Flows into funds investing in India, energy projects, and good quality corporate debt hit record levels in 2014, according to new data.
A new Indian prime minister, a potential energy crisis, and increasing fears of default meant these funds received $4.6 billion, $22.2 billion, and $202 billion respectively, research from EPFR showed.
Indian equities reversed their 2013 story, recouping more than the $4.1 billion of outflows suffered in the previous year with $4.6 billion backing Narendra Modi’s plans to tackle corruption in the country’s business world.
Flows to energy funds increased almost sixfold—up from $3.8 billion in 2013 to $22.2 billion—while investment grade debt benefited from investors shunning the risk they took in the previous 12 months. This asset class turned around a $60.8 billion outflow in 2013.
Investors also pulled their highest number of assets from some previously well-loved sectors in 2014, displaying fears for their future economic trajectories. Chinese and German equities lost a record $7.6 billion and $14.3 billion in outflows over the last 12 months, although each was buoyed by new investor cash in the last quarter of the year.
Emerging market equities as a whole, which had seen record outflows of $26.7 billion in 2013, saw more assets head for the door last year. However, the lower annual $24.7 billion figure—with a $21.4 billion exit attributed to the last quarter of the year—showed some investors still believed in the sector’s story.
With an additional $184 billion, developed market equities received substantial inflows, but this figure was less than half of the $385.1 billion investors plunged into the asset class in 2013.
Liquidity was on investors’ minds towards the end of the year as a $112 billion inflow to global money market funds pulled the sector to gain overall net new money of $39.3 billion in 2014.
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