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Investors Continue Pouring Cash Into Emerging Markets ETFs

October 26, 2016 11:00 am
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As has been widely documented, after several years of overt disappointment, emerging markets equities and exchange-traded funds are getting some of their groove back in 2016 and investors are responding in a big way.

Flows Data Confirmation

ETF flows data confirm as much. As of October 25, three of this year's top 10 asset-gathering ETFs are emerging markets funds. To put that number into perspective, it matches the number of U.S. equity funds on the list and is ahead of the number of bond ETFs on the top 10 list.

“More than $20 billion in new assets have flowed into exchange traded funds, or ETFs, measuring emerging markets in 2016 as of October 17, according to new analysis from global index provider FTSE Russell and ETF data and analytics provider XTF,” said FTSE Russell in a new note.

FTSE Russell is in the index provider for the Vanguard Emerging Markets Stock Index Fd (NYSE: VWO), the largest emerging markets ETF by assets. VWO is adding to its heft this year with inflows of $4.94 billion, a total exceeded by just nine other ETFs.

Assets Influx And Emerging Markets ETFs

This year's influx of assets to emerging markets ETFs is a return of sorts after investors scurried out of these funds last year.

“This growth is a sharp reversal from 2015, where this category saw outflows of approximately $2.5 billion. And, in terms of performance, ETFs measuring emerging markets have risen nearly 16 percent in 2016 year-to-date after falling 16 percent in 2016,” added FTSE Russell.

The Schwab Emerging Markets Equtiy ETF (NYSE: SCHE) has been another prolific asset gatherer among emerging markets ETFs this year. SCHE, which also tracks a FTSE index, has added nearly $412 million of its $2.2 billion in assets this year. SCHE tussles with VWO, among others, to be the least expensive emerging markets ETF.

VWO and SCHE are up 19.3 percent and 20.2 percent, respectively, year-to-date.

Disclosure: Todd Shriber owns shares of VWO.

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