ETF Professor Wonders If Risk Appetite Is Waning: A Tale Of Two ETFs (EEM, XLP)

Something interesting the ETF Professor wants to call to your attention. The S&P 500 was making fresh highs on October 19, but the iShares MSCI Emerging Markets Index (NYSE: EEM) turned the trick a few days earlier and this may prove to NOT be a good thing.

EEM is the primary ETF most retail investors get emerging markets exposure and it is the most heavily trading emerging markets ETF. And EEM has been getting battered over the past few weeks.

The ETF Professor compared EEM to the Consumer Staples Select SPDR ETF (NYSE: XLP), a place investors would hide when they want to get defensive and over the past month XLP is up nearly 3% while EEM is down 2%.

Remember that emerging markets fell first and then proceeded to lead the recovery in equity markets, but it appears investors may not be willing to embrace enough risk right now to drive EEM and related ETFs higher at the moment.