Emerging Markets ETFs Hit by November Outflows

December 2nd at 12:58pm by Todd Shriber

A rocky 2013 for emerging markets exchange traded funds in terms of investor redemptions continued in November with diversified funds tracking developing world economies witnessing $3.6 billion of outflows last month, according to monthly flows data from BlackRock (NYSE: BLK).

“The majority of net redemptions were attributable to the impact of Fed uncertainty on broad market ETPs. However, the outflows were halted toward the end of the month after a meeting of top Chinese officials to discuss social and market reforms aimed at boosting the country’s economic growth was well received,” said BlackRock. [November ETF Inflows Not Spectacular, but Decent]

Bolstered by Beijing’s reform-minded approach to improving the world’s second-largest economy, China-specific ETFs saw a combined $1.2 billion of inflow last month. The iShares China Large Cap (NYSEArca: FXI) accounted for $122 million of that total while the Guggenheim China Small-Cap ETF (NYSEArca: HAO) had November inflows of almost $29 million. [Beijing Reforms Boost China ETFs]

In terms of market-specific outflows, “Brazil, which saw outflows of ($0.7bn), has been out of favor this year while Korea, where outflows totaled ($0.8bn), has not,” said BlackRock.

Investors rushed into South Korean stocks due to cheap valuations and the market’s reputation for being one of the steadier hands in the emerging world.  A strong won and a current account surplus at a time when some more volatile emerging markets are dealing with account deficits have also increased the allure of South Korean equities and the iShares MSCI South Korea Capped ETF (NYSEArca: EWY). [South Korea ETFs Have Room to Run]

India, Mexico and South Korea are among the individual emerging markets that have garnered net inflows this year, but even with $1.2 billion of inflows last month, China joins Brazil and Russia among the developing markets that are still contending with year-to-date outflows.

Of the 10 worst ETFs in terms of 2013 outflows, five are emerging markets funds, including FXI and the iShares MSCI Brazil Capped ETF (NYSEArca: EWZ), according to BlackRock data.

Worst ETFs for 2013 Outflows

Chart Courtesy: BlackRock