Where did the smart money go in January?

At the start of the year, many were predicting a wholesale re-embracing of risk, as economic growth progressed and optimism returned. As such, the turmoil in emerging markets in response to the withdrawal of quantitative easing took many by surprise. Markets saw an early sell-off and have remained vulnerable ever since. Fund flows were dominated by the situation in developing markets. Investors grew increasingly nervous about the sell-off in emerging market currencies and started to back away from both equities and bonds in the regions. Even increasingly low valuations and improving...