The ETFs are down more than 8% so far this year, while SPDR S&P 500 (NYSEArca: SPY) is up nearly 18%. [BRIC, Emerging ETFs Need Brazil to Get Back in the Game]
In diversified emerging market ETFs, investors have pulled cash from the category in five of the last six months, and annual outflows are on pace for their largest total since at least 2000, according to Bloomberg. Vanguard FTSE Emerging Markets (NYSEArca: VWO) and iShares MSCI Emerging Markets (NYSEArca: EEM) are among the largest ETFs in this group.
“Investors are going to go where they’re treated best and right now the U.S. stands out,” said Bruce Bittles, chief investment strategist at RW Baird & Co., in the story. “A lot of bearish sentiment is building in emerging markets. Eventually once it reaches extreme, which I don’t think it has yet, it will provide a strong base for the markets to rally from.”
The chart below shows the relative performance of a BRIC ETF versus the S&P 500. The BRIC fund has been leading since early July.
Full disclosure: Tom Lydon’s clients own EEM and SPY.