eVestment data shows waning interest in emerging market equities
GLOBAL – Flows to emerging market equities remain positive, yet the asset class is growing at a much lower rate than it was in 2010, 2011 and 2012, according to institutional investing database eVestment.
The growth rate stood at 16% for the second quarter of 2013, 1.8% less than in the first quarter of the year.
Between the fourth quarter of 2008 and the first quarter of 2012, growth rates always surpassed 20%, peaking in the first quarter of 2009 at 30.4%.
The growth rates in the second, third and fourth quarters of last year reached 18%, 20% and 19.5%, respectively.
Manager replacement activity within emerging market equity began to increase during 2011 and remained strong throughout 2012.
This is normal behaviour as an asset class matures, according to eVestment.
Manager replacement increases as consultants and plan sponsors seek other managers to replace those that have underperformed.
The figure for manager-replacement activity for the second quarter of 2013 stood at 46.5%, compared with 40.4% in the second quarter of the previous year and 34.2% for the same period in 2011.
Today, the wins in emerging markets equity are approximately 50% from manager replacement and 50% from new inflows.
In 2011, wins in emerging markets equity were almost 70% from new inflows and 30% from manager replacement.
New flows amounted to 53.5% in the second quarter of 2013, compared with 59.6% in the second quarter of 2012 and 65.8% in the second quarter of 2011.
eVestment database search activity increased dramatically in 2008 and 2009 for emerging markets equity. Institutional asset flows followed suit.