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Emerging Market Equities See Positive Flows in April

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Positive flows continue

Emerging market equities received a modest $0.11 billion in new investments in the week ended May 1, 2015. This is the lowest amount in the past few weeks. The inflows were higher than the negative flows from the US (SPX) and lower than the total inflows for European equities (EFA).

Emerging markets have underperformed developed world markets since the 2007 financial crisis. Investors are placing higher bets on select economies backed by strong fundamentals and governments.

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Asset managers such as BlackRock (BLK), Fidelity Investments, Franklin Resources (BEN), Goldman Sachs (GS), HSBC Asset Management (HSBC), and Blackstone (BX) have increased their asset allocations in this market class. They’re betting that major economies will adopt aggressive monetary policies to support growth.

Investments in emerging markets (EEM) form approximately 12% of worldwide investments in terms of mutual funds and ETFs. The emerging economy offerings from mutual funds and ETF providers are expected to increase. Reform initiatives by major countries to further open economies, remove currency restrictions, and deploy funds are helping emerging regions attract more funds.

ETFs for emerging markets

Asset managers have increased their offerings of ETFs covering emerging market equities and debt. Asset managers, including BlackRock (BLK), JPMorgan Chase (JPM), Deutsche Asset & Wealth Management (DB), and others, now offer their investment products in emerging markets. Net flows are likely to rise for ETFs associated with performing economies.

Major ETFs such as the iShares MSCI Emerging Markets (EEM), the Vanguard FTSE Emerging Markets (VWO), the iShares Core MSCI Emerging Markets (IEMG), the WisdomTree India Earnings Fund (EPI), the iShares MSCI Emerging Markets Minimum Volatility ETF (EEMV), and the iShares MSCI India ETF (INDA) attracted positive flows totaling $0.3 billion for the week ended May 1, 2015.

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