Emerging market exchange traded funds (ETFs) are beating actively managed funds this year. iShares MSCI Emerging Markets (EEM) has returned 31% while actively managed funds averaged 29%. One reason active managers may be under performing is that they aren’t all free to invest where they might like, reports Michael R. Sesit of Bloomberg.com. Countries such as South Korea, Taiwan and China limit the amount of stock foreign investors can hold.
Investing in emerging markets has grown considerably. Even after the sell off in May, the markets have turned around. In 2005, emerging market funds drew in $20.3 billion and so far this year they have brought in $17.4 billion. The ETFs are seen as an easy and cost-efficient way to invest in emerging markets.
For full disclosure, Tom Lydon’s clients own EEM.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.