July tough for EM equities funds in Denmark

Danish investors sold equities and moved back into fixed income in July, as returns from emerging markets were squeezed, according to data from the Danish Investment Fund Association (IFB).

While equities markets in Europe, North America and Japan overall offered the best returns through the month, it was otherwise a period of concern about China, as well as the wider Far East and Latin America, the Association said.

“Danish and European investment funds were among those that managed best through the summer month, with gains of 4-5%. Emerging markets funds were characterised by falls. The average fund with Chinese equities fell 7.5% in July. Latin America funds followed with a loss of 6.6%,” the Association said.

In contrast, bond funds did not experience similar swings through the month. All funds with Danish bonds offered positive returns, the Association’s figures suggest.

The weight of total investments also worked in Danish investors’ interests, as the stock markets in Europe and North America, to which fund investors have greatest exposure, performed best through the month. The biggest losses came in areas that are more specialised, to which investors have lower exposures.

Through the year thus far it is Danish equities that have offered the best returns, some 29%, compared with global or European equities, which have averaged returns of 16% and 19% respectively.

“Most funds with Danish bonds have offered a negative return in 2015,” the Association added, noting that foreign bonds have offered slightly better returns, typically highest in the area of high yield funds.

Overall, July was characterised by big shifts in portfolio adjustments, the Association continued.

Its figures suggest that there were net sales out of equity funds – some DKK7bn on this basis – with a roughly similar net investment made in bond funds focused on both Danish and foreign bonds.


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