Emerging Markets ETFs can Absorb More Inflows

Emerging markets equities and the related exchange traded funds are among the best-performing assets in the world this year, but that does not mean the trade is crowded. Actually, data suggest otherwise.

Although ETFs, such as the Vanguard FTSE Emerging Markets ETF (NYSEArca:VWO) are packing on assets at a furious pace, U.S. investors remain under-allocated to emerging markets stocks.

“While they increased allocation to emerging markets by nearly $52 billion in the first quarter of 2017, U.S.-domiciled active managers still have just 5 percent of assets under management allocated to emerging market equities, data from research firm eVestment shows,” reports Reuters.

VWO and the iShares MSCI Emerging Markets ETF (NYSEArca:EEM), two of the largest emerging markets ETFs, have added $5.9 billion and $1.6 billion, respectively in new assets. VWO, the largest emerging markets ETF by assets, has seen its year-to-date inflows tally surpassed by just seven other ETFs.

Related: The 5 Best Performing ETFs of 2017