Even after record inflows, emerging markets are still cheap

Emerging market Equities ,,,, Investors have rekindled their love affair with emerging markets this year. Part rush for yield, part hunt for growth, investors have plowed a staggering $80 billion into emerging market portfolios this year according to the Institute of International Finance. Meanwhile, figures from Bank of America Merrill Lynch show record-breaking inflows into emerging market equity mutual funds of almost $24 billion over the ten weeks to September 9. Emerging market debt funds attracted some of the highest inflows ever over the same period.

It looks as if investors are clamoring...