Published by Global Banking & Finance Review®
Posted on March 6, 2026
2 min readLast updated: April 1, 2026
Add as preferred source on GoogleEmerging market equity funds have slumped sharply in March amid rising geopolitical tensions in Iran, leading to among the weakest performances across asset classes, alongside cooling inflows and a broader emerging-markets index decline.
March 6 (Reuters) - Emerging market equity funds have posted steep declines this month as investors cut exposure to risk assets amid the escalating Iran conflict, making them among the worst performers across asset classes.
Based on LSEG Lipper calculations, equity funds focused on Pakistan, Chile, Greece, Colombia, Argentina, the United Arab Emirates and Saudi Arabia were among the biggest decliners over the past month, across the 518 categories tracked by Lipper.
The pullback follows strong gains in emerging markets earlier this year, driven by relatively cheaper valuations, solid growth prospects and a weakening U.S. dollar.
MSCI’s emerging markets equities index has fallen more than 6% this week, compared with a 2.2% decline in the MSCI World Index and a 0.7% drop in MSCI United States.
Weekly flows data tracking about 13,000 emerging market equity funds showed inflows slowing to $5.8 billion this week, the lowest level in seven weeks.
Goldman Sachs said that if the disruption proves short-lived, the broader earnings impact may remain limited given the relatively resilient sector mix, and maintained its forecast for 25% growth in MSCI EM earnings per share in 2026.
"However, higher starting valuations following strong gains last year leave EM equity markets vulnerable to near-term correction risks,” the brokerage said.
(Reporting By Patturaja Murugaboopathy in Bengaluru. Editing by Jane Merriman)
Emerging market equity funds are declining as investors cut risk exposure due to the escalating Iran conflict, causing a broad selloff.
Funds focused on Pakistan, Chile, Greece, Colombia, Argentina, the United Arab Emirates, and Saudi Arabia were among the biggest decliners.
The MSCI emerging markets equities index fell over 6% this week, significantly more than the global and US indices.
Analysts like Goldman Sachs believe that if the disruption is short-lived, earnings impact may be limited and expect 25% EM EPS growth in 2026.
Weekly inflows slowed to $5.8 billion, the lowest level in seven weeks, as investors became more cautious.
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