In the Emerging-Markets Popularity Contest, Stock Funds Beat Bond Funds
But emerging-markets bond funds don't deserve to take a backseat to their equity cousins.
Emerging-markets bond funds attracted lots of attention from investors over the past year. The category garnered roughly $18.1 billion in inflows during the 12 months through May 31, 2012, which ranks fifth among all open-end mutual fund categories
However, diversified emerging-markets stock funds were even more popular. This category gathered approximately $21.7 billion in inflows during the year ended May 31, 2012, which ranks second among all open-end mutual fund categories and was by far the most among all equity categories. (The intermediate-bond category attracted the most assets over the past 12 months, while the short-term bond and high-yield groups ranked third and fourth, respectively.) The gap in inflows is surprising given that the average emerging-markets equity fund suffered a sizable 20% loss over the 12 months through May 31, while the typical emerging-markets bond offering incurred a minuscule 0.5% decline.