But continued worries about the U.S. economy and the subprime meltdown reappeared early in 2008, with investors pulling money out of all major stock funds groups and some bond funds groups in the first two trading days of the year, Boston-based EPFR Global said Monday.

Money market funds were the beneficiaries, attracting more than US$10 billion of net inflows over the two days.

EPFR’s preliminary full-year 2007 data showed massive rotation out of funds investing in developed markets and into funds specializing in emerging markets or with some exposure to emerging markets.

A final report on 2007 flow data will be released later in January.

Based on data from fund groups reporting activity daily and weekly, flows into global emerging markets funds last year were up 380 percent from 2006, and flows into Latin America equity funds were up 308 percent from 2006.

Last year saw a big rotation out of developed market funds as investors increased exposure to places such as Russia, Brazil and Korea, EPFR Global managing director Brad Durham said in a statement.

Flows into emerging markets equity funds during 2007 set a record in dollar terms but were second to 2005 based on flows as a percentage of net assets, Durham said.

Global emerging market funds, BRIC funds (Brazil, Russia, India and China) and Russia country funds had the momentum going into 2008, the report said.

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