Equity flows emerging market (EM) funds saw $2.9 billion of inflows in the week starting March 31 , the largest weekly inflow since February 2013 and flows into EM debt funds peaked at $1.8 billion, the highest level seen since January last year.
However, flows into equities funds in general remained robust at $11.2 billion, despite a week of "carnage" in U.S. equities, the BoAML report found.
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"Year-to-date performance in both EM credit and local bond funds is in positive territory, and close to flat in EM equity funds. Being long S&P 500 in 2014 has lost its shine," said head of CEEMEA Strategy at Standard Bank, Demetrios Efstathiou.
Efstathiou said buying developed market (DM) credit is starting to make no sense, when Greece is issuing a 5-year bond yielding under 5 percent.
"Using Greece as a benchmark, either DM credit is in a bubble frenzy, or EM credit is very cheap, or both. With investors seeking value, expect flows into EM, and the EM rally, to continue," he said.
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Head of EM strategy at Societe Generale Benoit Anne said even the Ukraine geo-political crisis failed to derail the great recovery of EM as an attractive asset class.
"Just a few months ago, EM was the synonym of junk, having lost all respectability among global investors," said Anne.
"A few weeks ago, we turned outright bullish on EM fixed income and EM sovereign credit. More recently, we argued that EM 'liquidity' currencies, those that are driven by risk appetite and yield-hunting behavior would do well," he added.