Investors are using exchange traded funds to slice and dice the emerging markets.
While broad emerging market ETFs have lost $6 billion in outflows over the past three years, country-specific ETFs that target emerging economies have seen $7 billion in inflows, reports Eric Balchunas for Bloomberg.
“This indicates that at least some investors are breaking EM exposure into more targeted pieces as they, along with such people as Mohamed El-Erian, question the logic of grouping disparate countries like India, Russia, Mexico and Poland into one, catch-all pile,” Balchunas said.
Specifically, among the top emerging market locales over the past three years, the 14 India-related ETFs attracted $5.3 billion in net inflows, China saw $2.5 billion in inflows and Russia added $1.2 billion, according to Bloomberg data.
Investors have utilized country-specific ETFs to capitalize on short-term shifts. For instance, options like the WisdomTree India Earnings Fund (NYSEArca: EPI), iShares India 50 ETF (NasdaqGM: INDY) and PowerShares India Portfolio (NYSEArca: PIN) have been popular for investors seeking India exposure after the election of pro-business Prime Minister Narendra Modi.
Some have also jumped onto the iShares China Large-Cap ETF (NYSEArca: FXI), SPDR S&P China ETF (NYSEArca: GXC) and Deutsche X-trackers Harvest CSI 300 China A-Shares ETF (NYSEArca: ASHR) to capture the recent rally in Chinese equities.