Washington, D.C., May 6, 2015 - Global fund investors have increased exposure to emerging markets in April, according to the IIF's latest Trends in Investment Fund Portfolio Allocation report.

"Fund portfolio weights for emerging market equities and fixed income securities increased modestly in April", noted Sonja Gibbs, director of capital and emerging markets policy at the IIF. "U.S. investors have been the most important source of EM bond and equity fund investment in recent weeks, while in their quest for yield, Euro Area investors continued to favor emerging market funds over emerging market equity funds."

The IIF identified the top five trends below:

• Less allocation to U.S. bonds and equities, but pickup in inflows to TIPS funds: After six months of solid uninterrupted growth, fund investors reduced exposure to U.S. bonds in April. The retrenchment has been pronounced in shorter-duration U.S. bonds and also in municipal bonds. However, investor demand for inflation-protected bonds via mutual funds and ETFs picked up in April, coinciding with the upturn in U.S. inflation expectations.
• Weights for Euro Area bonds up in April: After a marked retrenchment in the first three months of 2015 following the ECB's Quantitative Easing announcement, portfolio weights for Euro Area fixed income securities increased modestly for the first time this year. Core Euro Area countries have seen more bond allocations than for the Euro Area periphery, as tense negotiations with Greek authorities have weighed on periphery bond markets.
• Institutional investors return to emerging markets: Trends in fund portfolio weights for emerging markets suggest that some institutional investors started to return to emerging market equities while their exposure to emerging market bonds remained broadly stable.
• Greater differentiation in allocations across emerging market assets: China, Russia, and Nigeria recorded the largest rise in allocations in April while weightings for Brazil, Korea, India and Turkey declined. Notably, portfolio weights for India declined for the first time in more than a year, mainly reflecting the weak performance of Indian equity markets.
• Global fund investors remain cautious about China's stock market rally: With Chinese stock market valuations soaring, the share of Chinese equities in fund investors' portfolios have markedly increased over the past month. Notwithstanding this rally, fund investors, particularly institutional investors, have continued to be the net seller of Chinese equities.

The IIF has introduced this new monthly report to closely monitor emerging trends in asset allocation of mutual fund and exchange-traded fund (ETF) investors.

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The Institute of International Finance is the global association of the financial industry, with close to 500 members from 70 countries. Its mission is to support the financial industry in the prudent management of risks; to develop sound industry practices; and to advocate for regulatory, financial and economic policies that are in the broad interests of its members and foster global financial stability and sustainable economic growth. Within its membership IIF counts commercial and investment banks, asset managers, insurance companies, sovereign wealth funds, hedge funds, central banks and development banks. For more information visit www.iif.com.