In the week ending August 14, emerging market equities (EEM) saw total outflows of $284 million, compared to $314 million in the previous week. The outflows for emerging market equities were lower than European equities’ (EFA) inflows. They were also lower than US equities’ (SPY) outflows.
Investors withdrew funds from commodity-exporting nations due to the global manufacturing slowdown and declining commodity prices. China’s devaluation of its currency, combined with a steep decline in Russia’s GDP, led investors to withdraw funds from these emerging markets.
Investments in emerging markets account for ~12% of the worldwide investments in mutual funds and ETFs. Emerging economy offerings from mutual funds and ETF providers are expected to increase in the upcoming quarters. Reform initiatives by major countries to further open economies, remove currency restrictions, and deploy funds are helping emerging market economies to attract more funds.
Emerging market ETFs
Asset managers have raised their offerings of exchange traded funds or ETFs covering emerging market equities and debt. Asset managers such as BlackRock (BLK), JPMorgan Chase (JPM), State Street (STT), and Deutsche Bank AG (DB) now offer their investment products in emerging markets. Net investments will likely increase for ETFs linked with performing economies.
Major ETFs such as the iShares Core MSCI Emerging Markets ETF (IEMG), the iShares MSCI Emerging Markets ETF (EEM), the iShares MSCI India ETF (INDA), and the iShares MSCI Emerging Markets Minimum Volatility ETF (EEMV) attracted a positive investment flow totaling $172 million in the week ending August 14, 2015.
The ETFs that witnessed outflows include the WisdomTree India Earnings Fund ETF (EPI). Outflows totaled $140 million in the week ending August 14, 2015.