Emerging market equity funds took in a net inflow of $5.53 billion during the fourth week of September û their strongest week of net inflows since the first quarter of 2006 û as investors largely turned their back on fund groups geared to developed markets, according to data provider EPFR Global.

Asia is still the most favoured among emerging markets worldwide.

Asia ex-Japan equity funds accounted for 53% of total emerging markets inflows during the fourth week of September while the geographically diversified global emerging market funds û which have an average 51% allocation to Asia û made up another 29%. Pacific equity funds, which have suffered because of their heavy Japan allocations, posted inflows for the first time in nine weeks as investors focused on their emerging Asia holdings.

EPFR says US, Japan and Europe equity funds were the source of the cash that flowed back to emerging market funds. Combined redemptions from those three fund groups totaled $13.04 billion for the fourth week of September as US dollar weakness and fears about the fallout from US subprime mortgage crisis continued to hurt sentiment.

ôYou can argue that investors are finally fleeing to safety by moving money out of the US and Europe, whose banking systems have the greatest exposure to subprime linked debt, into emerging markets that offer little or no exposure and in many cases much better fiscal discipline,ö says Massachusetts-based EPFR global analyst Cameron Brandt.

Asia ex-Japan, global emerging market, Latin America and EMEA equity funds took in $2.96 billion, $1.64 billion, $788 million and $138 million respectively.

Asia ex-Japan funds, which hit their highest level in percentage of assets terms since the first week of February 2006, were well-supported by the $1.7 billion taken in by China, Greater China and Hong Kong funds.

BRIC (Brazil, Russia, India and China) funds have recovered some traction after slipping badly earlier this year, EPFR says. In 2006 BRIC equity funds took in a net $4.29 billion but through mid-August of this year they were down over $1.2 billion. Over the past five weeks, however, investors poured $828 million into those funds in addition to commitments to country-specific funds.

One BRIC market that investors have not warmed to is Russia despite its recent fiscal discipline, an appreciating currency, strong economic growth and large energy reserves. Flows into both Russia equity funds and the broader emerging Europe equity funds are negative year-to-date, in part because the relentless extension of state authority and fears about the possibility of another struggle for control of key assets following next yearÆs presidential election.

EPFR tracks around $10 trillion in assets in traditional and alternative funds worldwide.