Data on world fund flows from EPFR Global show some interesting trends. Fund flows returned to emerging market equity funds in the second quarter of calendar year 2011 (quarter ended June), a change from the outflows seen during the first quarter.

Still, as the chart shows, the net inflows were not as strong as during the last two quarters of 2010. The same can be said of inflows into Asia ex-Japan equity funds. In contrast, net inflows into developed market equity funds dipped into negative territory during the second quarter, compared with very strong inflows during the first quarter.

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Rather surprisingly, though, the movements in the MSCI indices during the June quarter do not really reflect the global fund flows. For instance, the MSCI US index was down 0.28% in the three months to 30 June, while the MSCI Emerging markets index was lower by 2.1%, with the Emerging Markets Asia down by 0.87%. Perhaps local selling added to the downward pressure in emerging markets.

Net outflows from the BRICS markets amounted to $849 million (around 3,780 crore today) in the June quarter, down from net outflows of $2.3 billion in the March quarter.

Notice that net inflows into the commodity sector funds also slipped into the red during the second quarter of 2011, after attracting strong inflows during the fourth quarter of 2010 and the first quarter of 2011. As a result, the Thomson Reuters/Jefferies CRB Commodity Index fell from around 359 at the beginning of April to 338 by 30 June.

Also, there was a big rise in net inflows into bond funds during the second quarter of 2011, with both emerging market and US bond funds attracting sizable amounts of investment. Some of the movement into US bond funds was because of money moving into safe havens as the turmoil in Greece intensified.

With the Greece problem temporarily shelved, some of this money is flowing back to equities. EPFR Global says that emerging market equity funds have regained momentum, with flows during the last week of June hitting a 12-week high.

Diversified Global Emerging Market and Asia ex-Japan funds have taken in the bulk of the flows, offsetting redemptions from Latin America and from emerging Europe.

Graphic by Yogesh Kumar/Mint