Chart of the day: Developed Markets

We spoke about a recent trend of inflows in Europe based ETFs earlier this week, and we see what is likely related activity or at least sentiment, in the largest Foreign Developed Equity ETF in terms of assets under management, EFA (iShares MSCI EAFE, Expense Ratio 0.34%).

EFA has pulled in more than $1.1 billion in recent sessions, which is still worth talking about even though the fund has a mammoth $48.9 billion in overall assets.

Related ETF, VEA (Vanguard FTSE Developed Markets, Expense Ratio 0.12%) “only” has $17.7 billion in assets currently to put it in perspective. Currently EFA has a 48% portfolio weighting to Europe, so it sure seems that institutional investors have an appetite this week for everything equity related and European.

Top single equity holdings in EFA are multi-nationals like Nestle SA (1.85%), HSBC Holdings PLC (1.67%), Roche Holding AG (1.53%), Toyota Motor Corp (1.46%), and Novartis AG (1.43%) to round out the top five. The
second largest country/region weighting in EFA is to Japan (22.28%), and there is lesser exposure to Australia (8.08%) the Middle East (0.49%), Emerging Asia (0.16%), and Latin America (0.02%).

Year to date now, EFA has posted net inflows of more than $3.8 billion, while VEA has seen just shy of $5 billion enter the fund, and this displays the demand that seems to be present for exposure here among institutional portfolio managers.

Given the recent buying pressure in the space, it also makes plenty of sense to watch leveraged “longs” in the EAFE and related spaces for accelerated activity here as well.