Emerging market funds returned with a bang in September but such impetus is unlikely to continue into October as the ongoing US debt ceiling debate and fears of a default could take a toll on market sentiment, potentially prompting investor outflows.
Following inflows of $560 million into emerging markets for the week of September 23, investors withdrew a net $240 million from bond funds last week, according to EPFR data. Outflows were primarily led by local currency bond funds with $292 million, followed by hard currency bond funds with $155 million. In contrast, blended currency funds still received inflows of $217 million.
The general outflow reflects the...
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