At the height of the recent concerns about European debt and the U.S. economic recovery, emerging market exchange traded funds (ETFs) were selling like cold hotcakes. Now things look different.
In July, the iShares MSCI Emerging Markets Index Fund (NYSEArca: EEM) experienced a 37% reduction in dollar bets against the fund as compared to the previous month, according to Dave Nadig for IndexUniverse, a signal that investors are feeling warmly about emerging markets once again. [Consumer ETFs: Going Global to Find Strength.]
The trend seems to indicate that investors are becoming a bit more risk tolerant as they reduce short selling emerging markets, remarks Nadig.
Meanwhile, bets against the developed markets as reflected by the iShares MSCI EAFE (NYSEArca: EFA) increased by 12.8%.
The renewed sentiment can be seen in the fund flows from July, too: $1.5 billion poured into iShares MSCI Emerging Markets (NYSEArca: EEM), while Vanguard Emerging Markets (NYSEArca: VWO) raked in a cool $2 billion.
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Max Chen contributed to this article.