Data on fund flows from EPFR Global shows several interesting trends. For instance, net inflows into developed market equities turned positive during the fourth quarter of 2010, as the chart shows.

While flows to emerging markets increased compared with the third quarter, the change was nowhere as dramatic as that in flows to developed market funds.

Most of the inflows into these funds were accounted for by the US market, based upon signs of a strengthening economic recovery. So while the MSCI World index was up 8.55% in the last quarter of 2010 and MSCI USA was up 10.45%, the MSCI Emerging Markets index rose by a lower 7.05%.

Another important trend was the levelling off of assets in US money market funds. Much of the fuel for the rally in risk assets had been provided by money flowing out of very low yielding US money market funds.

Graphic: Yogesh Kumar/Mint

US bond funds saw outflows of $7.3 billion in the last quarter of 2010, compared with large inflows of $58.4 billion in the third quarter.

The result has been a rise in US bond yields. EPFR says there was a reallocation of funds from US bonds to US equities during the quarter as the economy improved.

Another trend was the rise in inflows to commodities,as the chart shows. This has contributed to the rise in commodity prices. The Reuters/Jefferies CRB index went up from around 289 at the beginning of the fourth quarter of 2010 to 332.8 at its end.

Which funds are in vogue at the moment? Says EPFR Global, “Those finishing the year with momentum include Global Equity, Japan Equity and EMEA Equity Funds, Financial and Technology Sector Funds and Balanced Funds, all of which saw flows accelerate during the fourth quarter."