Hedge funds needed a profitable trade, and they just may have found it.
Managers in the nearly $3 trillion industry love emerging markets, a group that had been lagging well behind other areas but recently has shown strong returns.
The sector pulled in $1.2 billion in net long positions over the past month, according to Bank of America Merrill Lynch. That put total net longs to $15 billion for asset managers, the most bullish position going back to at least October 2009, which is as far back as BofAML records go.
That rush of institutional cash comes at a time when emerging markets are on the comeback trail. Slumping commodity prices and fears of a slowdown in China had been hampering EM investment, but that has changed.
Investors are looking for spots across the globe to put money. More than $67 billion has made its way into 30 emerging market nations, notable among them Pakistan, according to figures from the Institute of International Finance reported Monday in the Wall Street Journal.
After a brutal start to the year, indexes measuring emerging market stocks have posted solid gains in recent months. The MSCI Emerging Markets index is up about 27 percent since bottoming in the latter part of January.