Changes in the Global Investor Base and the Stability of Portfolio Flows to Emerging Markets

ByLuis Brandao Marques, Gaston Gelos, Hibiki Ichiue, Hiroko Oura

December 28, 2015

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

An analysis of mutual-fund-level flow data into EM bond and equity markets confirms that different types of funds behave differently. Bond funds are more sensitive to global factors and engage more in return chasing than equity funds. Flows from retail, open-end, and offshore funds are more volatile. Global funds are more stable in their EM investments than “dedicated” EM funds. Differences in the stability of flows from ultimate investors play a key role in explaining these patterns. The changing mix of global investors over the past 15 year has probably made portfolio flows to EMs more sensitive to global financial conditions.

Subject: Balance of payments, Bonds, Capital flows, Currencies, Financial institutions, Money, Mutual funds, Stocks

Keywords: Bonds, Capital flows, country flow data, crossover fund, Currencies, EM fund, emerging markets, end investor, Europe, fund characteristic, fund manager, Global, global bond, hard currency, investment company, managed fund, mutual funds, panel regression, Stocks, WP

Pages:
36
Volume:
2015
DOI:
https://doi.org/10.5089/9781513555560.001
Issue:
277
Series:
Working Paper No. 2015/277
Stock No:
WPIEA2015277
ISBN:
9781513555560
ISSN:
1018-5941

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