"Equity Mutual Funds Post Second-Biggest Weekly Inflows"


“About $22 billion flowed into equity funds around the world, according to data compiled by research firm EPFR Global going back to 1996. Emerging-market equity funds took in the most money on record in the week ended Jan. 9, Morgan Stanley wrote in a report today that cited EPFR data. The MSCI All- Country World Index (MXWD) jumped 3.1 percent in first week of 2013 and the Standard & Poor’s 500 Index reached a five-year high yesterday.”

So, a shitton of people bought stock since 1/1/2013. Is retail coming back to equities?

Hmm… Although I am currently bullish again going into next week… if Emerging Markets starts getting a record inflow… that kinda means, people are chasing crap now, which might mean that value is fairly priced…

Hopefully, it’s risk on for everybody but at a steady pace.

Probably a little early to call it. I think a ton of wealthy people went to cash in Q4 and waited to gain some clarity around the tax code post fiscal cliff. Now that we know, they’re coming back.

If we have positive inflow into equity mutual funds in Q2 I’ll be pleasantly surprised.

I kind of remember when everyone was into BRICs. I wonder how much of that was due to marketing. The term “BRIC” was invented by GS for research, and then it became client material. After a while, everyone started to copy the term and all these retail guys bought a ton of BRICs stuff. Now, that BRICs stuff is not sexy any more, and retail has fled related products.

This year, I keep seeing stuff about Mexico, Indonesia, South Korea, and maybe Taiwan. I think if you are looking to front run the retail horde, this is where to look.

Edit: I think I unfairly singled out retail investors above. The greasy tentacles of marketers reach all, not just retail people.

“Hopefully, it’s risk on for everybody but at a steady pace”…this is what you call a Pipe Dream!

I’m working on a 2012 recap and quarterly outlook piece and I’m struck by how emerging markets have done, particularly Turkey (kicking myself, because I actually recommended it to people, but didn’t buy it myself).

Basically, BRICs did relatively poorly, but a lot of other EMs did very well last year.

I have been in Indonesia, but it hasn’t done much. I liked how its return streams were fairly uncoorelated with other stuff. Peru has been ok, but not great.

I attribute the poor 2012 BRIC performance to those countries being overbought before then. At some point, even those countries themselves were like “yeah, this is ridiculous”. For instance, Brazil started to tax BRL purchases at 1% and bought a ton of USD to stop BRL from appreciating due to high international investor demand. You can tell that BRL has been range bound for a good part of 2012 as a result. (As a side note, I believe this makes a good case for buying BRL for yield, since the government basically has established a trading range. That’s another topic though).

I do think there is good potential for 2013 run ups in certain other emerging countries. Fundamentals are one thing, but as BRIC explosion in 2011 and stagnation in 2012 shows, investors can pile money into “cool” investments and rapidly increase asset prices. People are always eager to put money in “emerging markets”. Since BRICs are not cool any more, they are going to choose somewhere else. Mexico, Indonesia, Vietnam?

Maybe being on sell side has made me cynical, but I do think that trendy themes make the difference in a 1-2 year time span.

Is there a MIST etf? Or structured product that links to equities in Mexico, Indonesia, South Korea, Taiwan?

Well the is the old saying that when retail investors get in, its time to get out for a while. We’ll see, I am not sure how much I want to put in before the great debt ceiling debate of 2013.

Not sure about combined MIST ETF. It takes a lot of work to put those together. There are MIST structured products that you can buy through certain brokerage channels, but these are meant for people who let their FA do all the work (and take a high commission). For someone like you, it’s probably best to find the single country ETFs and trade your own basket.

no, but this article has all the etf’s listed and some insight on how to approach this investment…


I’m not sure why MIST would be a special enough category for its own ETF.

I’ve done some research on “what comes after the BRICs,” and the truth is that, except maybe Indonesia, there isn’t really another country with the mass to do what BRICs did. Thus, one needs a larger number of globally diversified countries, or a smaller number in the same region, or a few countries concentrated in the same industry, MIST is neither one nor the other: the countries in the portfolio would have to be expanded or contracted over time, so a portfolio based on an acronym doesn’t make much sense.

MIST is compared to BRIC mostly because the same guy at GS came up with this combination. Surely, MIST will not have the same global significance as BRIC, but if you’re just an investor looking at price appreciation potential, size doesn’t matter so much.

For what it’s worth, I think there is potential for explosive growth in some MIST countries, if the circumstances are correct. Take Indonesia for instance. They have crazy levels of natural resources, and demographics that are extremely favroable for growth. The problem is that their government is incompetent and they practice crony capitalism. All it will take is for the next Prime Minister to say “enough of this shit”, and they will become one of the biggest economies in the region within 10 years.

I don’t know why the specific MIST combination is special. We should expand our view to contain other high potential economies like Malaysia, Vietnam or Thailand. All these places are just a couple of steps away from being the next South Korea. The question is whether they will get their act together in 5 years, 20 years, or never.

All I’m getting at is that it’s not clear why you would want to do this as an ETF vs a portfolio of separate ETFs for each country. I agree that these countries have a good chance of performing well, but that new countries may be added or taken out of the mix over time.