Emerging market investment funds back in vogue

11 June 2009 / by Rebecca Sargent
Emerging market investment funds are back in favour, online stock broker and fund supermarket Interactive Investor has revealed.

According to Interactive Investor, the top three selling funds through Interactive Investor last week were emerging market investment funds, signifying a return to risk.

Commenting, Rebecca O'Keeffe, head of investment at Interactive Investor said: "We are seeing strong flows of money into emerging markets funds and especially to those funds that represent BRICs economies such as China, India and Russia.

"It is also notable that the top funds sold are country specific stocks, rather than general emerging market funds.

"This tells us that investors believe these economies will offer the best prospects for growth in the medium term and longer term, and reflects the strong gains recently made in these markets."

Meanwhile, Ms O'Keefe noted that although emerging market funds were also in the top ten most sold through Interactive Investor, the two most sold were income funds:

"If this trend continues, then it will be another key indicator that the long term investor is coming back to the market and is happy to take a higher risk approach than that adopted over the last 18 – 24 months," she added.

Commenting separately on the prospects of emerging markets, Andrew Bell, head of research at Rensburg Sheppards Investment Management said: "Emerging markets are likely to continue to lead the world out of recession and have better growth prospects than developed economies, which will be working off past excesses.

"Asia seems a better quality story than other regions but a diversified emerging market fund will enable an expert to make the tactical decisions."

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