Potential iShares solution: iShares Europe ETF (IEV)

  • Emerging markets

What the flows show: While it’s too soon to call it a turnaround, emerging market (EM) equity ETFs have seen an uptick in flows the past two months ($8.5 billion since Sep 1st 2013).  This is a marked improvement over the 7 months of outflows the category has experienced between February and August.  Recent flows have been highly focused in broad funds, but emerging markets country funds also saw some action with China and India together gathering $2.4 billion since the beginning of September.

What Russ K says: “We continue to like emerging market stocks over the next three to five years.  EM equities still look cheap considering their growth and corporate profit prospects, especially relative to U.S. stocks.  EMs still face some headwinds and investing in them is not for everyone, but we believe that growth-oriented investors should maintain exposure to these stocks.”

Potential iShares solution: iShares Core MSCI Emerging Markets ETF (IEMG)

Sources: World Bank, Bloomberg

Dodd Kittsley, CFA, is the Head of Global ETP Market Trends Research for BlackRock and a regulator contributor to the The Blog. You can find more of his posts here.

In addition to the normal risks associated with investing, international investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Securities focusing on a single country may be subject to higher volatility.

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