Exchange traded funds that track the emerging markets experienced their worst weekly outflows since August last week. However, anxious investors may have dumped holdings prematurely as the oversold market rallied Tuesday.
Investors yanked over $2.12 billion out of U.S.-listed emerging market ETFs in the week ended January 15, with China and Hong-Kong ETFs leading the losses, reports Kenneth Kohn for Bloomberg. Stock funds lost $1.89 billion while bond funds shrunk by $234 million.
Year-to-date, investors have redeemed $2.69 billion from emerging market ETFs.
The outflows come as global equities stumbled in the new year, with some of the worst performers out of the developing markets. So far this year, the Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO) declined 12.1% and iShares MSCI Emerging Markets ETF (NYSEArca: EEM) fell 11.6%. In contrast, the S&P 500 dropped 7.9%.
While emerging markets have been falling faster than less risky areas, developing market stocks are also showing greater upswings. For instance, on Tuesday, VWO rose 0.9% and EEM gained 1.0%, whereas the S&P 500 was 0.4% lower.