MARKETS & INVESTING | Staff Reporter, Singapore

Investors continue to park cash in Asian funds

This as they pull cash out of emerging markets funds for the third week out of four, according to a global funds report.

EPFR Global Fund Data News Release said Emerging Markets Equity Funds posted outflows for the third time in four weeks during early June as doubts about global growth and the ongoing struggle against inflation in many key markets kept investors on the sidelines. Overall flows were subdued, with modest inflows into Asia ex-Japan and Latin America Equity Funds offset to the tune of $220 million by redemptions from EMEA and the diversified Global Emerging Markets (GEM) Equity Funds.

In addition, with the US Federal Reserve signaling that it is in no hurry to follow QE2 with another round of quantitative easing, the European Central Bank (ECB) hinting that rates could rise in July and major emerging markets still wrestling with inflation, investors resumed their rotation from equities to bonds during the first week of June. Concerned that tighter monetary policy will sap already lackluster global growth, they steered $5.98 billion into EPFR Global-tracked Bond Funds -- a 47 week high -- and parked over $26 billion in Money Market Funds while redeeming a net $7.74 billion from Equity Funds.

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