US Investors Are Plowing Money Into Emerging Market ETFs 2
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International funds have been attractive

US investors have been exploring stocks beyond their borders in 2017. Data from Bloomberg showed that YTD until March 3, US-listed exchange-traded funds investing internationally have received net inflows to the tune of $17 billion. For the week ending March 3 alone, inflows to these funds totaled $1.5 billion.

Data from Bloomberg also showed US investors’ liking for emerging market equity-based ETFs. Until March 3, these funds had attracted net inflows amounting to $6.4 billion.

Meanwhile, global ETFs, which also invest in US stocks, have seen net inflows worth $3.3 billion so far this year.

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Instruments which have been popular

The ETF investing outside the US which has been the most popular among investors is the iShares Core MSCI Emerging Markets ETF (IEMG). With YTD flows of $4.4 billion, it has seen the highest inflows not only in the emerging market equities category, but also in the international category. These inflows form one-fourth of total flows to international funds this year. In the past one year, the fund has seen net inflows to the tune of $11.77 billion, equivalent to 40% of inflows to US-listed emerging market ETFs.

Other funds in the international category, which have attracted over $1 billion in the year so far are the iShares Core MSCI EAFE ETF (IEFA), the Vanguard FTSE Developed Markets ETF (VEA), the iShares MSCI EAFE ETF (EFA), and the Vanguard FTSE Emerging Markets ETF (VWO).

In the emerging markets category, net inflows to the IEMG and the VWO account for a staggering 92% of total flows to the category in YTD 2017. The Schwab Emerging Markets Equity ETF (SCHE) and the Schwab Fundamental Emerging Markets Large Company ETF (FNDE) are a distant third and fourth respectively, having attracted inflows of over $234 million and $132 million respectively.

Emerging market fixed income also in demand

US investors have taken a liking to emerging market debt as well. The category has seen net inflows to the tune of $1.6 billion in YTD 2017 and $7.1 billion in the past one year.

The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) dominates flows over both these periods with 69% of YTD flows and 60% of flows in the past one year directed towards the ETF.

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