M&G's Riddell: EMD outflows could be 'cataclysmic'

Mike Riddell, bond fund manager at M&G, has warned if emerging market debt outflows continue at their current pace or worsen, the effect on the asset class is likely to be "cataclysmic".

This Monday saw a record daily outflow from emerging market debt funds, beating the record set during the “dark days” of September 2011. EMD funds reported outflows of $1.44bn on the day, ahead of the 2011 record of $1.27bn. Total outflows over the three days from the previous Friday to Tuesday this week were $3.78bn. Although the outflows are still not as big as they could have been considering the asset class has seen the biggest drawdown since Q4 2008, Riddell is concerned there may be a much bigger sell-off to come. "If you assume this EM debt sell-off has been all about Fed sp...