Is it time to sell emerging market equities? According to Morgan Stanley’s Asset Managers May 13, 2016, flows report it might be time to do just that, although most “contrarian” investors will conclude that this could be a great time to buy.

According to the report, emerging market-focused mutual funds and ETFs saw their largest weekly outflows since September of 2015 last week as the investor exodus from the sector continued.

Sell emerging markets: General equity exodus 

The equity exodus wasn’t just limited to emerging markets. Developed market ETFs and mutual funds also saw strong outflows. Domestic US equity funds were the primary driver of the long-term mutual fund outflows. Equity mutual fund saw total outflows of -$2.6 billion, driven by domestic equity outflows, which came in at -$2.7 billion; partially offset by inflows to international equity +$0.1 billion.

Balanced products produced slight outflows -$0.1 billion. ETF outflows totalled -$1.1 billion, driven by outflows from equity ETFs -$2.3 billion, partially offset by inflows to bond ETFs +$1.2 billion.

Mutual fund bond inflows totalled +$2.1 billion, driven by inflows to US taxable bonds +$1.2 billion and muni funds +$1.0 billion (their 26th week of inflows), slightly offset by outflows from international taxable -$0.1 billion.

Overall mutual fund inflows totalled +$3.9 billion last week, driven by money market inflows of +$4.5 billion, which were partially offset by long-term mutual fund outflows of -$0.6 billion outflows.

The biggest winners of the equity outflows seemed to be bond funds. Bond mutual funds and ETFs with a domestic US focus saw strong inflows, although inflows decelerated from previous weeks.

US domiciled high-yield focused mutual funds saw flows evaporate completely while US domiciled high-yield ETFs reported yet another week of outflows. At the beginning of May US domiciled high-yield, ETFs reported the most aggressive outflows of the past three years.