Following Donald Trump’s presidential election win, exchange traded fund investors have been selling off their emerging market exposure as the U.S. dollar strengthened and protectionist rhetoric scared off traders.
Net redemptions from emerging market equity funds hit a five-week high in the latest week, with investors yanking $3.7 billion from emerging stock funds in the week to Wednesday, reports Nicole Bullock for the Financial Times.
Accoding to EPFR Global data, Asia ex-Japan equity funds saw net redemptions of $2.36 billion in the week ended Wednesday, the largest weekly outflow since September of 2015. China equity funds also experienced their largest outflows since May at $667 million.
Among the largest emerging market ETF options, the iShares MSCI Emerging Markets ETF (NYSEArca: EEM) saw $3.6 billion in net outflows and the iShares J.P. Morgan USD Emerging Markets Bond ETF (NYSEArca: EMB) lost $914.5 million in assets since the start of the fourth quarter, according to XTF data.
“That seems consistent with investor uncertainty about emerging markets, especially Asia, when it comes to some of the rhetoric with regard to potential changes in trade policy let alone where we may see the dollar continue to move,” David Mazza, head of ETF and mutual fund research at State Street Global Advisors, told the Financial Times. “It has an impact at the country and the company level for many of these emerging markets.”