It is no secret by now that equity leadership in 2015 has come from Emerging Markets with benchmark ETF EEM (iShares MSCI Emerging Markets, Expense Ratio 0.67%) sporting a >6.28% YTD return versus the S&P 500 Index barely eking out a gain in the same time frame.

China, which carries the highest single country weighting in the MSCI Emerging Markets Index at >19.7%, has seen an equity market moonshot in recent sessions with benchmark ETF FXI (iShares China Large Cap, Expense Ratio 0.74%) vaulting above $46 today, more than 27% higher than its late October 2014 lows.

In spite of out-performance in the EM space, EEM (with about $29.8 billion in overall assets under management presently) has still seen redemption flows year to date on this strength (>$3.1 billion out) and related and larger in AUM terms ETF VWO (Vanguard FTSE Emerging Markets, Expense Ratio 0.15%, $46.8 billion in AUM) has also seen outflows but to a lesser extent (approximately $375 million out).

Short term performance has been even more impressive in levered bull funds in the EM space although fund flows have been flat to negative year to date despite this. We are watching EDC (Direxion Daily Emerging Markets Bull 3X Shares, Expense Ratio 0.95%), EET (ProShares Ultra MSCI Emerging Markets, Expense Ratio 0.95%), and China specific YINN (Direxion Daily China Bull 3X Shares, Expense Ratio 0.95%), and XPP (ProShares Ultra FTSE China 50, Expense Ratio 0.95%).

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