Emerging Market ETFs Back in Favor | ETF Trends

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.]

Short selling on the iShares FTSE/Xinhua China 25 (NYSEArca: FXI) diminished by 19.9% as compared to the previous month. [EEM vs. VWO: Report from the Front Lines.]

The trend seems to indicate that investors are becoming a bit more risk tolerant as they reduce short selling emerging markets, remarks Nadig.