Emerging markets struggle as US policy uncertainty driving investors to safer bets, says EPFR Global

Cameron Brandt, Director of Research at EPFR Global said that emerging markets are not performing well because investors are being cautious due to policy uncertainty in the US. This has led to more money flowing into safer investments like fixed-income, gold, and inflation-protected bond funds.He explained that expectations regarding US interest rates have shifted. As a result, inflation-protected bond funds are attracting more investments, and financial sector funds are doing well since investors believe interest rates will remain high for a longer period. On the other hand, technology funds have been facing some losses recently.

“In the emerging markets universe, nobody is doing particularly well. Chinese funds are seeing a steady drip of outflows; the attitude there seems to be when you do something for me, I will return. In India, redemptions have stabilised but have not picked up,” he said.

Brandt stated that the only emerging market segment showing positive performance is Europe, the Middle East, and Africa (EMEA) funds. Meanwhile, global emerging market funds continue to experience small but steady outflows.Also Read: Kotak’s Sanjeev Prasad still sees froth in market, expects 15% FY26 Nifty growth

Talking about the impact of US President Donald Trump’s statements on India, Brandt said that Trump has learned from his first term that the first six months in office are spent dealing with external crises. He believes Trump may view India as a potential long-term ally.

For the entire interview, watch the accompanying video

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